Leadership and Management
What is leadership, and what is the difference between leadership and management?
In a nutshell, the difference between leadership and management is:
* Leadership is setting a new direction or vision for a group that they follow, ie: a leader is the spearhead for that new direction
* Management controls or directs people/resources in a group according to principles or values that have already been established.
The difference between leadership and management can be illustrated by considering what happens when you have one without the other.
Leadership without management
...sets a direction or vision that others follow, without considering too much how the new direction is going to be achieved. Other people then have to work hard in the trail that is left behind, picking up the pieces and making it work. Eg: in Lord of the Rings, at the council of Elrond, Frodo Baggins rescues the council from conflict by taking responsibility for the quest of destroying the ring - but most of the management of the group comes from others.
Management without leadership
...controls resources to maintain the status quo or ensure things happen according to already-established plans. Eg: a referee manages a sports game, but does not usually provide "leadership" because there is no new change, no new direction - the referee is controlling resources to ensure that the laws of the game are followed and status quo is maintained.
Leadership combined with management
...does both - it both sets a new direction and manages the resources to achieve it. Eg: a newly elected president or prime minister.
Some potential confusions...
The absence of leadership/management is not to be confused with participatory or facilitative management, which can be a very effective form of leadership.
Also, the absence of leadership should not be confused with the type of leadership that calls for 'no action' to be taken. For example, Gandhi's calls for protests to stop demonstrated great leadership, because taking no action was a new direction for the Indian people at that time.
Symbolic Leadership
When a leader acts as a figure-head without setting any direction, technically this is not leadership. However, the figure head may be viewed as a leader. For example, in the UK, the monarch is often viewed as a leader, but actually provides very little leadership (most of the 'leadership' in the UK comes from political figures).
However, if a new group sets a direction of its own accord, it will often express that new direction in the form of a leader. For example, Nelson Mandela was regarded as a great leader even though he was in prison and unable to communicate with his followers! And he had been historically classified as a "terrorist"! Yet his symbolic power grew across the world. This was because he was a symbolic spearhead of the anti-apartheid movement.
However, Nelson Mandela was more than just a symbolic leader. When he was released from prison, he showed great leadership in the statesmanship he showed, and in reaching out a hand of friendship to his oppressors. This landed a double-whammy blow against the apartheid regime, because:
* During the period when Nelson Mandela was imprisoned (when his ability to provide personal, direct leadership was limited) he continued to grow in power and influence as the symbolic leader for the anti-apartheid movement.
* Following his release from prison, he demonstrated actual leadership.
Leadership and Management Summary
Leadership is about setting a new direction for a group; management is about directing and controlling according to established principles. However, someone can be a symbolic leader if they emerge as the spearhead of a direction the group sets for itself.
Source: www.teamtechnology.co.uk/leadership-basics.html
Monday, November 16, 2009
Studying at the Last moment, sure almost every one does it !!
I work at the last moment because
1.I like working under pressure
2.I think I can do it whenever !!
3.I always get work done, and get it done well
For me leaving thing until the last moment is the right choice.
Why leaving things until the last moment isn’t always a bad thing ??
which would you prefer… getting something done in 5 hours, or getting it done in 1 hour?
Right. And that’s exactly where leaving things until the last moment comes in.
For example if you have seven weeks to work on a project,and you can get something done in the last two weeks before the deadline, and get it done well, there is no reason why you should spend time “working” on it over seven weeks.
It makes much more sense to get the work done in two weeks, and spend the other five enjoying other areas of your life
There is absolutely no reason why you should feel guilty if leaving things until the last moment lets you be productive. So don’t listen to people stuck in the traditional “busy=productive” mode of thinking. If leaving something until the last moment lets you be more productive, you’re being smart, not lazy.
A word of caution
There’s one thing to watch out for though.
Your mind is an amazing device. It lets you keep track of thousands of sensory inputs every minute, and still stay sane. Unfortunately, sometimes it turns against your best interests.
And one way that happens is rationalizing your decisions. Sometimes you make a decision based on a flood of emotions, and then later make up rational reasons. What could happen here is that you decide to put things off because you don’t feel like doing them, and then rationalize by thinking
Don’t let that happen. Remember the main point, – leaving things until the last moment is good if it lets you be more productive.
In other words, it’s ok if it saves you time. However, leaving things until later will often only cost you MORE time (and more stress), in which case do them immediately!
And that’s all. You don’t need to feel bad about leaving things until the last moment anymore. Enjoy!
1.I like working under pressure
2.I think I can do it whenever !!
3.I always get work done, and get it done well
For me leaving thing until the last moment is the right choice.
Why leaving things until the last moment isn’t always a bad thing ??
which would you prefer… getting something done in 5 hours, or getting it done in 1 hour?
Right. And that’s exactly where leaving things until the last moment comes in.
For example if you have seven weeks to work on a project,and you can get something done in the last two weeks before the deadline, and get it done well, there is no reason why you should spend time “working” on it over seven weeks.
It makes much more sense to get the work done in two weeks, and spend the other five enjoying other areas of your life
There is absolutely no reason why you should feel guilty if leaving things until the last moment lets you be productive. So don’t listen to people stuck in the traditional “busy=productive” mode of thinking. If leaving something until the last moment lets you be more productive, you’re being smart, not lazy.
A word of caution
There’s one thing to watch out for though.
Your mind is an amazing device. It lets you keep track of thousands of sensory inputs every minute, and still stay sane. Unfortunately, sometimes it turns against your best interests.
And one way that happens is rationalizing your decisions. Sometimes you make a decision based on a flood of emotions, and then later make up rational reasons. What could happen here is that you decide to put things off because you don’t feel like doing them, and then rationalize by thinking
Don’t let that happen. Remember the main point, – leaving things until the last moment is good if it lets you be more productive.
In other words, it’s ok if it saves you time. However, leaving things until later will often only cost you MORE time (and more stress), in which case do them immediately!
And that’s all. You don’t need to feel bad about leaving things until the last moment anymore. Enjoy!
A GOOD PRODUCT CAN BE EYE-CATCHING
I Like this quote “We're obviously going to spend a lot in marketing because we think the product sells itself.”
Jim Allchin
Jim Allchin
It's useless to fear failure. failures tou achay hotay hain!
I couldn't learn accounting, i wasn't making any growth, i noticed. And pondered, why? Another thing i noticed was that whenever i attempted to solve a long, brain drying accounting case/question, i was too much overwhelmed by the fear of failure. Then i reflected: "Do i easily learn any other subject i am good at without initially failing at it?" Answer was in negative. There's a hindsight in it for the people of understanding, well described by today's Management Tip of the Day. It says:"We spend a lot of time and energy at work trying not to fail. However, most people describe their failures as an important part of learning and growing. Adapt a growth mindset and accept that failure is part of the process of skill development. People with a growth mindset feel smart when they're learning, not just when they're succeeding. Don't limit yourself to doing things that you know you can do — you won't grow that way. Instead, try things that are above your ability, set high goals that you aren't sure you can reach. You might surprise yourself and succeed — and if you don't, you'll learn something new."Learning is our "categorical imperative". (But don't make a habit of having too many categorical imperatives, though.)
Principle of Innovation: Don't lose 'focus' off your market segment
Sir Mannan could not over-emphasize this principle while explaining a step in the process of innovation to our now ex-senior students of business sciences. The principle is simple, in words of Naeem Zafar*: "The problem is indigestion, not starvation, my friend--too many ideas and not enough focus." In sir Mannan's terms: Start with a (small) single market segment to test your newly-born product.
Like what Facebook's founders did. "[W]hen Facebook started, the company's founders could have covered the entire internet user market, but they started by aiming at college campuses. In fact, they focused at first on a single campus: Harvard University!" Professor Naeem continues to advice, "Once you have worked out the kinks in your first deployment, you can cover the market more broadly. The same principle applies when it comes to product features and marketing campaigns: be precise and methodical. This is where good research can help you pick the best market segment. Remember: market research is key to succeeding as an entrepreneur."
Nowhere this principle may better be demonstrated than in our professor's own video-presentation, which is still being shown to all Standford entrepreneurship school graduates.
* Naeem Zafar is the faculty member of University of Berkeley Haas Business School. www.Startup-advisor.com
Like what Facebook's founders did. "[W]hen Facebook started, the company's founders could have covered the entire internet user market, but they started by aiming at college campuses. In fact, they focused at first on a single campus: Harvard University!" Professor Naeem continues to advice, "Once you have worked out the kinks in your first deployment, you can cover the market more broadly. The same principle applies when it comes to product features and marketing campaigns: be precise and methodical. This is where good research can help you pick the best market segment. Remember: market research is key to succeeding as an entrepreneur."
Nowhere this principle may better be demonstrated than in our professor's own video-presentation, which is still being shown to all Standford entrepreneurship school graduates.
* Naeem Zafar is the faculty member of University of Berkeley Haas Business School. www.Startup-advisor.com
ROLE OF MARKET RESEARCH
The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information. Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information. Sound decisions are not based on gut feeling, intuition, or even pure judgment.
Marketing managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers.
Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the "DECIDE" model:
D
Define the marketing problem
E
Enumerate the controllable and uncontrollable decision factors
C
Collect relevant information
I
Identify the best alternative
D
Develop and implement a marketing plan
E
Evaluate the decision and the decision process
The DECIDE model conceptualizes managerial decision making as a series of six steps. The decision process begins by precisely defining the problem or opportunity, along with the objectives and constraints. Next, the possible decision factors that make up the alternative courses of action (controllable factors) and uncertainties (uncontrollable factors) are enumerated. Then, relevant information on the alternatives and possible outcomes is collected. The next step is to select the best alternative based on chosen criteria or measures of success. Then a detailed plan to implement the alternative selected is developed and put into effect. Last, the outcome of the decision and the decision process itself are evaluated.
sourcehttp://en.wikipedia.org/wiki/Marketing_research
Marketing managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers.
Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the "DECIDE" model:
D
Define the marketing problem
E
Enumerate the controllable and uncontrollable decision factors
C
Collect relevant information
I
Identify the best alternative
D
Develop and implement a marketing plan
E
Evaluate the decision and the decision process
The DECIDE model conceptualizes managerial decision making as a series of six steps. The decision process begins by precisely defining the problem or opportunity, along with the objectives and constraints. Next, the possible decision factors that make up the alternative courses of action (controllable factors) and uncertainties (uncontrollable factors) are enumerated. Then, relevant information on the alternatives and possible outcomes is collected. The next step is to select the best alternative based on chosen criteria or measures of success. Then a detailed plan to implement the alternative selected is developed and put into effect. Last, the outcome of the decision and the decision process itself are evaluated.
sourcehttp://en.wikipedia.org/wiki/Marketing_research
MARKET RESEARCH
Marketing research is the systematic gathering, recording, and analysis of data about issues relating to marketing products and services. The term is commonly interchanged with market research; however, expert practitioners may wish to draw a distinction, in that market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes.
Marketing research is often partitioned into two sets of categorical pairs, either by target market:
Consumer marketing research, and
Business-to-business marketing research
Or, alternatively, by methodological approach:
Qualitative marketing research, and
Quantitative marketing research
Consumer marketing research is a form of applied sociology that concentrates on understanding the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to understand the effects and comparative success of marketing campaigns.
Thus, marketing research may also be described as the systematic and objective identification, collection, analysis, and dissemination of information for the purpose of assisting management in decision making related to the identification and solution of problems and opportunities in marketing. The goal of marketing research is to identify and assess how changing elements of the marketing mix impacts customer behavior.
sourcehttp://en.wikipedia.org/wiki/Marketing_research
Marketing research is often partitioned into two sets of categorical pairs, either by target market:
Consumer marketing research, and
Business-to-business marketing research
Or, alternatively, by methodological approach:
Qualitative marketing research, and
Quantitative marketing research
Consumer marketing research is a form of applied sociology that concentrates on understanding the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to understand the effects and comparative success of marketing campaigns.
Thus, marketing research may also be described as the systematic and objective identification, collection, analysis, and dissemination of information for the purpose of assisting management in decision making related to the identification and solution of problems and opportunities in marketing. The goal of marketing research is to identify and assess how changing elements of the marketing mix impacts customer behavior.
sourcehttp://en.wikipedia.org/wiki/Marketing_research
Market research for business/planning
Market research is for discovering what people want, need, or believe. It can also involve discovering how they act. Once that research is completed, it can be used to determine how to market your product.
Questionnaires and focus group discussion surveys are some of the instruments for market research.
Market research is for discovering what people want, need, or believe. It can also involve discovering how they act. Once that research is completed, it can be used to determine how to market your product.
Questionnaires and focus group discussion surveys are some of the instruments for market research.
HISTORY
Market research began to be conceptualized and put into formal practice during the 1920s, as an offshoot of the advertising boom of the Golden Age of radio in the United States. Advertisers began to realize the significance of demographics revealed by sponsorship of different radio programs, so they increasingly sought more direct feedback about their markets.
Market research began to be conceptualized and put into formal practice during the 1920s, as an offshoot of the advertising boom of the Golden Age of radio in the United States. Advertisers began to realize the significance of demographics revealed by sponsorship of different radio programs, so they increasingly sought more direct feedback about their markets.
Market research is any organized effort to gather information about markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing research is concerned specifically about marketing processes, while market research is concerned specifically with markets.
Value Addtion:
The difference between cost of materials and labor to produce a product, and the sale price of a product is the value added. In national accounts used in macroeconomics, it refers to the contribution of the factors of production, i.e., land, labor, and capital goods, to raising the value of a product and corresponds to the incomes received by the owners of these factors. The national value added is shared between capital and labor (as the factors of production), and this sharing gives rise to issues of distribution.
The difference between cost of materials and labor to produce a product, and the sale price of a product is the value added. In national accounts used in macroeconomics, it refers to the contribution of the factors of production, i.e., land, labor, and capital goods, to raising the value of a product and corresponds to the incomes received by the owners of these factors. The national value added is shared between capital and labor (as the factors of production), and this sharing gives rise to issues of distribution.
Leaders Top Three Mistakes
1. Managing instead of leading.
When a leader spends more time managing than leading, morale suffers among the troops. Most people would prefer a goal to shoot for and some freedom to figure out how to reach that goal.
2. Mistaking individual loyalty for team building.
The next mistake is a bit more subtle and difficult to detect.
Let's say that you are the person at the top of the leadership chain in your organization. You are the crossbeam. Those steel spheres hanging beneath the crossbeam are the people who work closely with you. The plastic connectors are the individual relationships you make with those people.
You, the leader, pull one of your team members away from the others and get him pumped up about a change that needs to be made. That's like pulling one of the steel balls and holding it there. Then when you let him go, you expect him to return to the rest of the team, where they will all function with superb team dynamics, solving the current problems, achieving team goals, and making changes.
The leader lets that team member go, and he just bangs against the other team member closest to him, and that one bangs quickly into the team member next to him, and so on. So all that really happens is that this one team member bangs into the others, and they swing back and forth, bumping into each other."We shouldn't neglect the individual relationships with those who work closely with us. We also can't miss the important steps necessary to putting those people together in team situations where they learn what it means to work together.
3. Failing to apply what motivates us.
"What motivates you?" . "The ability to create? The freedom to apply what you know in order to solve problems? The thrill of a new challenge? Ask most leaders what motivates them and those items will surface. But when we get our jobs down to a science and there are no new challenges, we get bored or lose interest."
A leader may know what motivates him, but he forgets that the same things motivate those who work for him.
1. Managing instead of leading.
When a leader spends more time managing than leading, morale suffers among the troops. Most people would prefer a goal to shoot for and some freedom to figure out how to reach that goal.
2. Mistaking individual loyalty for team building.
The next mistake is a bit more subtle and difficult to detect.
Let's say that you are the person at the top of the leadership chain in your organization. You are the crossbeam. Those steel spheres hanging beneath the crossbeam are the people who work closely with you. The plastic connectors are the individual relationships you make with those people.
You, the leader, pull one of your team members away from the others and get him pumped up about a change that needs to be made. That's like pulling one of the steel balls and holding it there. Then when you let him go, you expect him to return to the rest of the team, where they will all function with superb team dynamics, solving the current problems, achieving team goals, and making changes.
The leader lets that team member go, and he just bangs against the other team member closest to him, and that one bangs quickly into the team member next to him, and so on. So all that really happens is that this one team member bangs into the others, and they swing back and forth, bumping into each other."We shouldn't neglect the individual relationships with those who work closely with us. We also can't miss the important steps necessary to putting those people together in team situations where they learn what it means to work together.
3. Failing to apply what motivates us.
"What motivates you?" . "The ability to create? The freedom to apply what you know in order to solve problems? The thrill of a new challenge? Ask most leaders what motivates them and those items will surface. But when we get our jobs down to a science and there are no new challenges, we get bored or lose interest."
A leader may know what motivates him, but he forgets that the same things motivate those who work for him.
Business Success
These include:
Picking the right applications. Business rules are a powerful tool for building smarter decisions into your applications but are better suited for some applications than others.
Following a process. Like any development technology, business rules work best when you have a structure and follow a suitable methodology.
Writing the right rules, the right way, and reusing them. Ensure your business rules are concise and atomic and use the right metaphor to manage them. Take advantage of your ability to manage them for reuse and to systematically verify, validate and simulate rules to get the result you want.
Operationalizing predictive analytics. Business rules are an ideal platform for putting predictive analytics to work to improve the effectiveness and precision of decisions.
These include:
Picking the right applications. Business rules are a powerful tool for building smarter decisions into your applications but are better suited for some applications than others.
Following a process. Like any development technology, business rules work best when you have a structure and follow a suitable methodology.
Writing the right rules, the right way, and reusing them. Ensure your business rules are concise and atomic and use the right metaphor to manage them. Take advantage of your ability to manage them for reuse and to systematically verify, validate and simulate rules to get the result you want.
Operationalizing predictive analytics. Business rules are an ideal platform for putting predictive analytics to work to improve the effectiveness and precision of decisions.
Stars
They are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom.
They are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom.
Question marks (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.
Cash cows
They are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.
They are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.
Boston Matrix, Boston Consulting Group analysis) is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management and portfolio analysis.
For me, there are at least 8 qualities that successful leaders have.
1. Responsibility
The best leaders take responsibility for making things happen. We all know just how easy it is to blame external factors and we probably all have done this at some time. You know the scenario. If only accounts, purchasing, sales and marketing, customer services, etc would do this everything would be okay. We might even blame the economy, the weather or even the competition. If you want to excel as a leader take responsibility for making things happen.
2. Integrity
Your success depends on others following. People will only follow if they believe they can rely on you to demonstrate high standards, be open, honest and truthful with them. They also expect consistency. When you are consistent (no matter what your leadership style is) people know what to expect.
3. Decision takers
We all have fears and doubts when it comes to taking decisions. Will it be the right one, what happens if it goes wrong, how will I look or be perceived by others? These are just a few of the questions and dilemmas faced or going through their head. What sets successful leaders apart is their willingness to face fears and take decisions rather than procrastinate. They know that they will get their fair share of decisions wrong and will learn from them.
4. Deal with facts
Realism is essential if you are to be a successful leader. Realism is about facing up to whatever is going on, rather than expending energy wishing it was different. When faced with decisions, the best leaders will focus on the facts to determine what is realistic. Imagine you are faced with a poorly performing organisation. You might wish it could be fixed next month or next week, but the reality might be that it will take months and maybe years.
5. Vision and inspiration
The most successful leaders have the ability not just to create a vision but to communicate it in an inspiring way. They see the big picture and inspire others to work together to make it happen.
6. Optimism
There are some who are naturally pessimistic, while others are naturally optimistic. Successful leaders are part of the second group. They know that they cannot control every eventuality but they can control how they respond. They focus on solutions, not problems.
7. Resilient
No matter what you set out to as a leader, there will be set backs, disappointments and failures along the way. The most successful leaders are extremely resilient and when things do not work out as they hoped, they bounce back.
8. Excellence
Excellence in what they do is one of the defining qualities of successful leaders. They have a mindset of continuous improvement. They look for better, smarter ways of doing things. They are continual learners.
While leaders have numerous qualities, making a start on these 8 can get you off to a flying start.
1. Responsibility
The best leaders take responsibility for making things happen. We all know just how easy it is to blame external factors and we probably all have done this at some time. You know the scenario. If only accounts, purchasing, sales and marketing, customer services, etc would do this everything would be okay. We might even blame the economy, the weather or even the competition. If you want to excel as a leader take responsibility for making things happen.
2. Integrity
Your success depends on others following. People will only follow if they believe they can rely on you to demonstrate high standards, be open, honest and truthful with them. They also expect consistency. When you are consistent (no matter what your leadership style is) people know what to expect.
3. Decision takers
We all have fears and doubts when it comes to taking decisions. Will it be the right one, what happens if it goes wrong, how will I look or be perceived by others? These are just a few of the questions and dilemmas faced or going through their head. What sets successful leaders apart is their willingness to face fears and take decisions rather than procrastinate. They know that they will get their fair share of decisions wrong and will learn from them.
4. Deal with facts
Realism is essential if you are to be a successful leader. Realism is about facing up to whatever is going on, rather than expending energy wishing it was different. When faced with decisions, the best leaders will focus on the facts to determine what is realistic. Imagine you are faced with a poorly performing organisation. You might wish it could be fixed next month or next week, but the reality might be that it will take months and maybe years.
5. Vision and inspiration
The most successful leaders have the ability not just to create a vision but to communicate it in an inspiring way. They see the big picture and inspire others to work together to make it happen.
6. Optimism
There are some who are naturally pessimistic, while others are naturally optimistic. Successful leaders are part of the second group. They know that they cannot control every eventuality but they can control how they respond. They focus on solutions, not problems.
7. Resilient
No matter what you set out to as a leader, there will be set backs, disappointments and failures along the way. The most successful leaders are extremely resilient and when things do not work out as they hoped, they bounce back.
8. Excellence
Excellence in what they do is one of the defining qualities of successful leaders. They have a mindset of continuous improvement. They look for better, smarter ways of doing things. They are continual learners.
While leaders have numerous qualities, making a start on these 8 can get you off to a flying start.
Effective leadership
It is what determines whether a business achieves, struggles or falls by the wayside.
It is what determines whether a business achieves, struggles or falls by the wayside.
SWOT analysis for Wal-Mart world's largest retailer...
Strengths.
Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA).
The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart's efficient procurement.
A focused strategy is in place for human resource management and development. People are key to Wal-Mart's business and it invests time and money in training people, and retaining a developing them.
Weaknesses.
Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
The company is global, but has has a presence in relatively few countries Worldwide.
Opportunities.
To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.
New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centres, to local and mall-based sites.
Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.
Threats.
Being number one means that you are the target of competition, locally and globally.
Being a global retailer means that you are exposed to political problems in the countries that you operate in.
The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.
Reference: http://www.marketingteacher.com/SWOT/walmart_swot.htm
Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA).
The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart's efficient procurement.
A focused strategy is in place for human resource management and development. People are key to Wal-Mart's business and it invests time and money in training people, and retaining a developing them.
Weaknesses.
Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
The company is global, but has has a presence in relatively few countries Worldwide.
Opportunities.
To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.
New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centres, to local and mall-based sites.
Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.
Threats.
Being number one means that you are the target of competition, locally and globally.
Being a global retailer means that you are exposed to political problems in the countries that you operate in.
The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.
Reference: http://www.marketingteacher.com/SWOT/walmart_swot.htm
DID WE REALLY HAVE TO MAIL OUR ASSUGNMENTS OR ARE PEOPLE DOING IT JUST AS A PRECAUTIONARY MEASURE AND WHEN ARE WE HAVING OUR MARKETING CLASS?
Information Technology (IT) and CRM.
CRM is more than just software. For the purposes of this introduction - Information Technology (IT) and CRM have three key elements, namely Customer Touch Points, Applications, and Data Stores.
Customer Touch Points are vital since your business has a marketing orientation and focuses upon the customer and his or her current and future needs. This is the interface between your organisation and its customers. For example you buy a new car from a dealership, and you enter a showroom. The dealership is a contact point. You meet with a salesperson whom demonstrates the car. The salesperson is a contact point. You go home and look at the car manufacturer's website, and then send the company an e-mail. Both are contact points. Other contact points include 3G telephone, video conferencing, Interactive TV, telephone, and letters.
Applications are essentially the software and programmes that support the process. Incidentally, this is what some would call CRM - but we know better. Applications serve Marketing (e.g. data mining software* and permission marketing**), Sales (e.g. monitoring Customer Touch Points), and Service (e.g. customer care).
Data Stores contain data on every aspect of the customer, and the Customer Life Cycle (CLC). For example, an organisation keeps data on the products you buy, when you buy them, and where they are sent. Data is also kept on the web pages that you visit and the products that you consider, but then do not buy. Leads are stored here. Data on the life time value of individual customers is stored here, as well as details of how and when the customer was recruited, how - and for how long - individuals have been retained, and details of any products that have been extended to individuals are also stored. The data is analysed using Applications.
*Data Mining is where an organisation evaluates large Data Stores for patterns, or relationships between groups or individuals (or segments). Applications present 'patterns' in a format that can be used for marketing decision-making.
** Permission Marketing is where a customer elects to accept (or 'opt-in' to) marketing material from an organisation e.g. where you buy insurance and the vendor asks if you wish to receive further details from them, or similar organisations. It is so called because marketers need your 'permission' to market to you. Permission marketing can occur at any of the Customer Touch Points.
CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:
- Information Technology (IT) perspective
- The Customer Life Cycle (CLC) perspective
- Business Strategy perspective
CRM is a process of building and maintaining profitable customer relationships by offering superior customer value and satisfaction. Various softwares are used in various organizations to ensure that better CRM is always there. I used this CRM software when i worked as a Customer relationship officer in Trafco tacking Company.
Reference: www.marketingteacher.com
Traffic Lights
A tool for creative marketing.
As with many of the tools and techniques considered on Marketing Teacher, traffic lights is a simple and effective approach. It's just like the traffic lights that are seen in millions of streets throughout the world, and is a basic metaphor for red, amber and green. Red means 'let's STOP it,' Amber means 'PROCEED WITH CAUTION, but make some improvements,' and Green means 'Go' or 'Let's carry on with this activity.'
Traffic lights is a creative marketing tool that can be used in a number of ways.
- You could conduct a personal traffic lights exercise based upon your own personal or professional development.
- The exercise can be run at any stage of the marketing planning or creative process. So you could run it as you begin marketing, during a marketing campaign, and at the end of a marketing programme as you review or control your marketing activities.
Traffic lights has a number of benefits to marketing managers:
- It encourages a creative approach to marketing
- Traffic lights is simple to use
- Traffic lights is quick to learn
- Traffic lights cross cultures, since most countries use this common approach to traffic control.
- Traffic lights transcend interdepartmental and disciplinary differences so that it is a common platform for decision-making.
The starting point is to decide upon an activity on which to base your traffic lights exercise. Some examples include:
- How do we improve our marketing planning?
- How do we make our marketing communications activities more effective?
- In what ways could eMarketing be made more efficient?
- How could I become a better marketing manager?
- How could I improve my grades?
Traffic Lights, Example - Serendipity
So let's consider a company called Serendipity that markets Ski Wear. Serendipity conducted a traffic lights exercise upon its core marketing activities. Marketing managers and interested individuals from purchasing, sales management, finance and R&D met in a training room, and recorded their views under the headings red-amber-green. The results are as follows:
Red - STOP
- Get rid of any distributors that favour competitor brands over our own.
- Withdraw product lines that make a loss.
- Remove our branding from any none-ski wear clothing.
- Stop sponsoring amateur or low ranking skiers, and enhance the exclusivity of our brand.
Amber - PROCEED WITH CAUTION, and make some improvements.
- Reduce the number of distributors that have Serendipity agency agreements. Start backing our proactive winners that really wish to endorse our brand and make it central to their business.
- Promote or reposition products that are mature.
Green - Go or Let's carry on with this activity.
- Reward our best distributors, and develop as the bases for long-terms relationships.
- Develop and enhance products that are highly profitable.
- Let's continue to sponsor top skiers that enhance our brand values.
Reference: www.marketingteacher.com
SWOT Analysis Dell.
Strengths.
Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.
Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer's own specification. Components are made by suppliers, never by Dell. PC's are assembled using relatively cheap labour. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.
Weaknesses.
The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causing electric shocks or fires.
Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World).
Opportunities.
Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained the company's Chairman. Despite founder Dell's massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow.
Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell compete against iPod and other consumer electronics brands.
Dell is making and selling low-cost, low-price computers to PC retailers in the United States. The PC's are unbranded and should not be recognised as being Dell when the consumer makes a purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing costs.
Threats.
The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands, retaliation from competitors and new entrants to the market pose potential threats. Dell sources from Far Eastern nations where labour costs remain low, but there is nothing stopping competitors doing the same - even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer.
Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets. Although it is a very lean organization, orders do have to be placed some time ahead due to their size or value. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain.
Reference: www.marketingteacher.com
Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.
Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer's own specification. Components are made by suppliers, never by Dell. PC's are assembled using relatively cheap labour. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.
Weaknesses.
The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causing electric shocks or fires.
Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World).
Opportunities.
Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained the company's Chairman. Despite founder Dell's massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow.
Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell compete against iPod and other consumer electronics brands.
Dell is making and selling low-cost, low-price computers to PC retailers in the United States. The PC's are unbranded and should not be recognised as being Dell when the consumer makes a purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing costs.
Threats.
The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands, retaliation from competitors and new entrants to the market pose potential threats. Dell sources from Far Eastern nations where labour costs remain low, but there is nothing stopping competitors doing the same - even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer.
Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets. Although it is a very lean organization, orders do have to be placed some time ahead due to their size or value. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain.
Reference: www.marketingteacher.com
Sunday, November 15, 2009
WHAT ARE MARKETING PRINCIPLES?
Principles of marketing are normative statements about marketing that specify a
condition followed by a suggested action (Armstrong and Schultz 1993, p. 253). The word
“normative” simply means explicating a norm, where norm is an authoritative rule. Thus,
principles are action steps or rules that are authoritative in the sense that they work in a given
situation.
Another way of looking at marketing principles is that they are operational guidelines,
telling managers how to act in a given situation. These definitions are entirely consistent with the
concept of principle of action, defined by Dray (1957) as follows:
When in a situation of type C1 …Cn the thing to do is x.
(p.132).
Hempel (1965) picks up this idea in his classic Aspects of Scientific Explanation, but, while
accepting the concept per se, goes on to extend it (inappropriately, some may say) to rational
explanation. We do not need to know that a manager who did x did so because of situation C. It
is sufficient to use the concept of principle of action (or guideline for action) to mean only that a
manager should do x in situation C.
PRINCIPLES AND EMPIRICAL GENERALIZATIONS
The relationship between principles and empirical generalizations is that all principles are
necessarily based on empirical generalizations, but not all empirical generalizations can be
reduced to principles of action. This is why it is not useful to equate principles with empirical
generalizations, as was done by Cierpicki, Wright and Sharp (2000) (CWS). CWS demonstrate
that an example given by Armstrong and Schultz (1993) could be deduced from premises that
were empirical generalizations. But this is not surprising since Armstrong and Schultz said that
principles “incorporate marketing knowledge” and Leone and Schultz (1980), cited by CWS
immediately after the demonstration, said that “marketing generalizations are marketing
knowledge” (p. 10) (italics in original). So this is not controversial.
What is controversial (wrong, we think) is the redefinition by CWS of principles as
“statements of marketing knowledge derived from previous research and experience” (p. 772).
This is wrong because there are empirical generalizations in all branches of science that cannot
be reduced to principles. They may be laws of nature but they are not principles of action.
Indeed, there is nothing in them that could be controlled.
Ignoring obvious examples such as the laws of planetary motion and just sticking with
examples from the work of Ehrenberg can make the point. Ehrenberg (1968) shows that
children’s weight (w) and height (h) are related by
logw =0.78h +0.42.
This is clearly an empirical generalization since it holds across many conditions (different
genders, ages, nationalities and so forth) but just as clearly not a principle of action since weight
cannot be controlled to produce changes in height or the reverse. Thus it is not useful to define
principles as equivalent to generalizations.
THE SEARCH FOR MARKETING PRINCIPLES
In searching for marketing principles there are four initial places to look: marketing
textbooks (often titled “Principles of Marketing), marketing managers, marketing professors and
books and articles on marketing theory and thought. Principles may also be reported in
individual research papers but there are simply too many of those to investigate. We can suppose
that marketing professors who think they have identified a principle would lay claim to that.
A final source of marketing principles may have been right in front of us for many years:
the inherent logic of marketing decisions. If certain marketing concepts and strategies are
logically related, they would provide a basis for deducing principles. While the principles would
be synthetic, they still could be enormously useful to marketing managers and provide something
to write about in “principles of marketing” textbooks.
The record of finding principles in textbooks, from marketing managers or marketing
professors or in the marketing literature is not good.
Marketing textbooks. Armstrong and Schultz (1993) could find no principles in marketing
textbooks that were rated as correct, supported by empirical evidence, useful and surprising.
Their study showed that not only did the textbooks contain no principles, the statements that they
did contain were judged to be nearly as correct when their wording was reversed!
There is little indication that things have changed. Even a casual perusal of a new
marketing textbook reveals statements that are not based on empirical generalizations and thus
inadmissible as marketing principles. Armstrong and Schultz’s suggestion that authors and
publishers incorporate principles into textbooks titled “Principles of Marketing” has so far been
ignored.
Marketing managers. Cierpicki, Wright and Sharp (2000) looked to marketing managers to find
principles of marketing that were used in practice. Using a panel of Australian practitioners, they
found that of a dozen potential marketing principles, only three statements were not empirically
contradicted or required further evidence. The three that remained were:1
Sheer weight of marketing dollars increases the probability of new product success.
The main reason that products fail is lack of uniqueness.
To pick a winning product, researchers should look at trial and repeat purchase rates, not
just raw sales numbers.
1 Recall that these authors inappropriately equated marketing principles and empirical generalizations.
While there is ample opportunity to do a more comprehensive study of practitioners, there is also
every reason to believe that the results would not be terribly different—mainly due to the
imperative that any valid marketing principle must be based on an established empirical
generalization.
Marketing professors. We are unaware of any study of marketing professors per se with the
intent of identifying marketing principles from their teaching, research or consulting. Scott
Armstrong, however, has identified a set of advertising principles that he reports on a Web site
called advertisingprinciples.com. While Armstrong lists 224 principles, he does not state what
empirical support exists for any of them. By our strict definition of what constitutes a principle,
these may be more accurately called guidelines. Even so, Armstrong’s initiative is both welcome
and appreciated.
MARKETING PRINCIPLES IN WRITING ON MARKETING THEORY
For more than 50 years papers and books have been published debating the scientific
basis of marketing as an academic discipline. Some of that work discusses or purports to present
principles of marketing. While it is not feasible to assess every paper written on the subject, it is
possible to look more closely at the studies that have the intent of presenting marketing
principles.
STUDIES
We look at three monographs that deal explicitly with marketing principles: Bartels
(1962), Schwartz (1963) and Lockley (1964).2
Bartels. The first study examined was a history of marketing thought from about 1900-1960
(Bartels 1962). This book was considered to be a good starting point since it explicitly covered
2 Ironically, marketing theory publications since these “golden years” have not focused on principles per se.
the first textbooks to be titled “Principles of Marketing.” In the first instance where Bartels statesa principle, however, it is what we call a generalization, and a loose one at that:
… the middleman himself can be eliminated, but his function cannot.
(p.167)
The main section of the book on principles lists them in five categories: operational principles,
principles involving institutional relationships, principles relating to the marketing task,
hypothetical principles and truisms. Discounting the latter two for obvious reasons, we examined
the 18 statements in the other three categories. All of the statements are at best non-empirical
generalizations and at worst tautologies. Only a few of the statements allow marketing principles
to be derived and these require restatements to get there. One principle was reported as:
The leasing of departments of a department store tends to be most desirable when skill,
specialized knowledge, and extreme style risks are involved in handling goods in
question. (p.189)
Assuming specialized knowledge embodies a skill (at using it) and ignoring extreme style risks,
which is undefined, the statement can be rewritten as:
Goods involving specialized knowledge are best sold through leased departments.
which is a generalization but implies the principle:
If you have goods involving specialized knowledge, sell them through leased
departments.
Only one other of the 18 statements of principles can possibly be considered to be a nonempirical
generalization and none are directly stated as principles. The conclusion we reach from
examining Bartel’s study is that there are no principles of marketing identifiable from the 1900-
1960 period through this book.
It is unfortunate that Bartels’ lack of distinction between the concepts of law, theory,
principle and generalization, first made (more correctly, not made) in 1944 (Bartels 1944) so
hindered the advancement of marketing science. Twenty six years later he would still define a
principle as “a statement of causal relationship between two or more phenomena” (Bartels 1970,
p. 60). This tradition of confusion continues among marketing scholars to this day.
Schwartz. Schwartz (1963) reports on several contributors to marketing theory, notably
William J. Reilly’s (1931) law of retail gravitation,3 which not only is remarkable in and of itself,
but also shows that laws or generalizations are not necessarily principles. Reilly’s main law is:
Two cities attract retail trade from any intermediate city or town in the vicinity of the
breaking point approximately in direct proportion to the population of the two cities and
in inverse proportion to the square of the distances from these two cities to the
intermediate town.
(Schwartz 1963, p. 11).
Clearly this is a generalization but not a principle, i.e., reducible to a principle.
Of more relevance to the current task, Schwartz reports on Cox and Goodman’s (1956)
study of housebuilding in which and two principles derived from that study:
1. Under the principle of massed reserves, goods are held for a group of distributors and
users b a few agencies. This principle results in a reduction in the cost of storage
because total stocks can be smaller when they are centralized than when they are
dispersed.
(Schwartz 1963, p. 127)
2. The principle of postponement was developed by Reavis Cox and Wroe Alderson.
This principle states that marketing efficiency is enhanced if business entities
postpone changes in form and identity of products to the latest possible point in the
3 Actually a set of laws.
marketing flow and postpone changes in inventory location to the latest possible point
in time. This principle is designed to avoid or reduce the cost of mistaken
commitments.
(Schwartz 1963, p. 128)
Lockley. Lockley (1964) discusses principles that are more properly generalizations. Each
“principle” is supported by reasoning but not (naturally, given the times) by empirical research.
While we are concerned here about principles that are rules for action, Lockley’s statements help
to clarify why it is a bad idea to equate principles with generalizations since each of these clearly
lacks an actionable implication.
Here are Lockley’s five generalizations:
The Principle of Drift. There will always be a tendency of merchandise to drift down
from a “specialty” to a “shopping” to a “convenience” goods classification.
The Principle of Diminishing Sales Effort. As competition forces a greater supply of
more nearly equivalent merchandise onto the market, the sales aggressiveness of
individual vendors decreases.
The Principle of Institutional Proliferation. As a particular field of merchandise reaches a
state of competition where reasonable parity exists among competitive offerings, there
will be a tendency for the proliferation of intervening institutions or middlemen to take
advantage of the economics of specialization.
The Principle of Brand Proliferation. When selective demand cannot be developed or
becomes infeasible to maintain for a product class for which primary demand exists then
additional brands may be expected to develop or to be offered by other vendors until an
equilibrium is reached.
The Principle of Nonprice Competition. For products for which product or marketing
differentiation becomes difficult, there will be an increasing tendency toward nonprice
competition, and the extent of this nonprice competition will tend to be in proportion to
the size or resources of the vendors competing.
These generalizations should have been empirically tested long ago.PRINCIPLES BASED ON MARKETING LOGIC
The fact that marketing has elements of a deductive science is not well known. Consider
something as common as the so-called 4 P’s. The tactical marketing mix variables that constitute
the marketing mix are discussed in marketing texts in every possible order despite the fact that
only one order is logical and, indeed, there are only 3 P's! A review of 21 marketing textbooks
published in the past four decades found that all combinations of product-price-place-promotion
were represented (see Appendix). Yet only one sequence makes logical sense. This logical order
provides an opportunity to deduce a marketing principle. Similar reasoning can be used to
deduce other marketing principles. These principles can be regarded as synthetic since they do
not require empirical evidence; they are logical necessities.
THE MARKETING MIX
The first "P" can be considered to be product or product strategy. But this is nothing more
than positioning, which itself includes virtually all aspects of how a product is designed to be
perceived by a consumer. Since positioning is strategic in the sense of determining where a brand
should be in the minds of consumers vis á vis competition, once the positioning decision is made,
there are just tactical marketing mix variables to set. This, then, is the "3 P's." And there is only
one logical order for the 3 P's and that is price, then place, then promotion.
As a restatement of a brand's positioning strategy, a brand's core benefit proposition
suggests what pricing strategy it should use. If it's offering more "benefit," then a price skimming
strategy (relative to its closest competitor) makes sense; if it's offering more "value," then a price penetration strategy would be most appropriate.
From the product strategy, i.e., the core benefit proposition, and the pricing strategy, a
brand can deduce its distribution strategy. Since a brand's business model is influenced by price
and place, a price skimming strategy generally implies selective distribution and a price
penetration strategy generally implies intensive distribution. Yet many companies mix this up
and try to make a profit selling a few low margin items.
Finally, promotion comes last. Advertising agencies won't like this, but it's the truth.
Promotion is communicating the product, price and place strategies to the target market. That's
all. Too many companies look to advertising and promotion to rescue a brand in trouble when
the problem lies in the core benefit proposition. Both push and pull promotion strategies can be
used to communicate the core benefit proposition, but with advertising (a pull strategy) it seems
easier to forget what promotion is for.
This chain of logic suggests the synthetic marketing principle:
Make the tactical marketing mix decisions in the order of price, place and promotion.
OTHER SYNTHETIC PRINCIPLES
Other synthetic marketing principles can be derived for ways to grow sales, choose a
market coverage strategy, deal with competition and make other marketing management
decisions. Indeed, an entire approach to marketing based on “logic” is possible.4 Rather than
concede that marketing has no principles or mount an elaborate search for principles that must in the first instance depend on empirical generalizations—which have been so slow in coming—it
seems more helpful to turn to logical relationships that may have been poorly examined in the
past or simply missed. These statements can then provide a starting point for building up a
4 This is the approach taken in the course on Marketing Management at the University of Iowa
(http://www.biz.uiowa.edu/class/6m147/).
theoretical framework for marketing management that replaces homilies and tautologies with
marketing principles that truly improve marketing decisions.
CONCLUSION
This paper has shown that marketing principles are necessarily based on marketing
generalizations but also definable through synthetic means based on marketing logic. In
reviewing the sources of marketing principles, it was shown that marketing textbooks, marketing
managers, marketing professors and books and articles on marketing theory and thought have not
proved to be significant sources of marketing principles. This finding is even more shocking
given the fact that many of the textbooks and courses are titled “Principles of Marketing.”
The straightforward relationship between the marketing mix variables of product, price,
place and promotion was given as an example of using logic to derive synthetic principles. As
with all “self-evident” logic, such examples run the risk of someone saying, “Of course, that’s
true. Why is this a contribution?” To this we answer with the simple observation that, if it is so
self-evident, why has no one ever discussed it?
Principles of marketing can be found if they are looked at in a fresh light and attention
shifted to the logical consistency of marketing decisions. Given the track record of the past, this
approach is surely worth trying.
India's Retail market
India is one the most targeted country for the retail world and global retailers are trying to enter into the Indian retail market. The market is growing at a steady rate of 11-12 percent and accounts for around 10 percent of the countries GDP and 8 percent of employment. The expected investment in the next 2-3 years will be Rs. 20-25 billion and over Rs. 200 billion by end of 2010. Indian retail market is considered to be the second largest in the world in terms of growth potential. Last decade only a few competitors were there. But due to high growth rate so many companies (i.e, Wall Mart, Reliance, Tata) are coming with huge investment
I Market, You Market, We Market Market
If you're starting to wonder if this title has anything to do with what I'm about to write on here, you must be kidding me cuz there's nothing I can write that would have anything to do with the title. Anywho..... Did you guys check out, Cristiano Ronaldo was in an advert for Clear For Men Shampoo. I mean as much as I hate the guy, the man has gazillions of fans all over the world. I'm no market analyst, but I'd say this was a pretty...... smart move by the brand. I mean even though I don't like him I would still buy an All Clear the next time out because..... come on..... the guy represents fame, success, money and ahem ahem. I mean really, this guy doesn't just influence Manchester United or Real Madrid (the two clubs he's played for) fans but, football fans in general. So I think my point is pretty clear clear (though I haven't stated any.... stupid me) that Brands use famous celebrities and public icons to associate themselves with...... You know what? I think I saw something like this written in the book, something about Opinion Leaders..... aaaah!!! I'm too lazy to open the book right now, besides it would make this article more boring than its already getting.
Another recent Advert I saw was Kareena Kapoor in the new SONY VAIO commercial. Her new slim shape....... a dream of all the girls we have out here and her skimpy clothes that help her show that. I mean COME ON!!!!! Could she wear any less clothes...... Of course she could, hehehe. Anyway, thats not the point. The point is that, ummm even if she does influence her target market to buy a VAIO, doesn't mean they will. I mean just because I want a Giorgio Armani Suit cuz its the official Formal Wear providers for Chelsea FC, doesn't mean I'll buy one. IT COSTS MORE THAN $1000. So I really don't know what VAIO are playing at. I don't think the teenage girls or the undergrads in India or elsewhere would be able to afford a VAIO.
But now if you look at Garnier. They take Ashwariya Rai and John Abraham to pull out a similar market but I think they'd be at an advantage seeing as most people they actually influence are able to buy Garnier products. And...... what else???? yeah.... a little bit of Pakistani stuff, but right after the T20 World Cup, Pepsi took Shahid Afridi in their Advert. Smart move???? you could say so.
So I'll sign off by pointing one more peculiar thing, I just realized the personalities and brands associated we just mentioned do not really compliment each other at all. You would expect to see Ronaldo in an Advert for a Nike (he already does though) and what Kareena Kapoor have anything to do with laptops or Football Club with Tailored Suits..... but these brands still use these strategies to great effect.
Comparative Advertising
Definition and Introduction
Comparative Advertising may be defined as "Advertising that compares two or more specifically named or recognizably presented brands of the same generic product or service class" and make such comparison in terms of one or more specific product or service attributes."
Comparative advertising, as a special form of advertising, is a sales promotion device that compares the products or services of one undertaking with those of another, or with those of other competitors. All comparative advertising is designed to highlight the advantages of the goods or services offered by the advertiser as compared to those of a competitor. In order to achieve this objective, the message of the advertisement must necessarily underline the differences between the goods or services compared by describing their main characteristics. The comparison made by the advertiser will necessarily flow from such a description.
Comparative advertising is a natural extension of Freedom of Speech, and a natural consequence of the free market scenario that we are in today.
"In fact, Comparative advertising in the true sense has often been confused with Disparagement."
Functional Advantages of Comparative Advertising
Comparative advertising enable advertisers to objectively demonstrate the merits of their products. Comparative advertising improves the quality of information available to consumers enabling them to make well-founded and more informed decisions relating to the choice between competing products/services by demonstrating the merits of various comparable products. Based on this information, consumers may make informed and therefore efficient choices.
Comparative advertising which aims to objectively and truthfully inform the consumer promotes the transparency of the market. Market transparency is also deemed to benefit the public interest as the functioning of competition is improved resulting in keeping down prices and improving products. Comparative advertising can stimulate competition between suppliers of goods and services to the consumer's advantage.
Advantages from the Consumer's Point of View
From the Consumer's point of view, Comparative advertising has more advantages than disadvantages. For example, Comparative advertising represents an inevitable part of the consumer decision-making process, particularly at the evaluation stage.
Consumer wants needs and looks for more information to help him in making decisions. Comparative advertising can facilitate efficient decision-making, and fill the gap in the consumer's search for meaningful information.
Definition and Introduction
Comparative Advertising may be defined as "Advertising that compares two or more specifically named or recognizably presented brands of the same generic product or service class" and make such comparison in terms of one or more specific product or service attributes."
Comparative advertising, as a special form of advertising, is a sales promotion device that compares the products or services of one undertaking with those of another, or with those of other competitors. All comparative advertising is designed to highlight the advantages of the goods or services offered by the advertiser as compared to those of a competitor. In order to achieve this objective, the message of the advertisement must necessarily underline the differences between the goods or services compared by describing their main characteristics. The comparison made by the advertiser will necessarily flow from such a description.
Comparative advertising is a natural extension of Freedom of Speech, and a natural consequence of the free market scenario that we are in today.
"In fact, Comparative advertising in the true sense has often been confused with Disparagement."
Functional Advantages of Comparative Advertising
Comparative advertising enable advertisers to objectively demonstrate the merits of their products. Comparative advertising improves the quality of information available to consumers enabling them to make well-founded and more informed decisions relating to the choice between competing products/services by demonstrating the merits of various comparable products. Based on this information, consumers may make informed and therefore efficient choices.
Comparative advertising which aims to objectively and truthfully inform the consumer promotes the transparency of the market. Market transparency is also deemed to benefit the public interest as the functioning of competition is improved resulting in keeping down prices and improving products. Comparative advertising can stimulate competition between suppliers of goods and services to the consumer's advantage.
Advantages from the Consumer's Point of View
From the Consumer's point of view, Comparative advertising has more advantages than disadvantages. For example, Comparative advertising represents an inevitable part of the consumer decision-making process, particularly at the evaluation stage.
Consumer wants needs and looks for more information to help him in making decisions. Comparative advertising can facilitate efficient decision-making, and fill the gap in the consumer's search for meaningful information.
The Secret of Balance
Abraham Lincoln Said:
“If I had eight hours to chop down a tree, I'd spend six hours sharpening my axe”
And this clearly indicates us not to consume ourselves in work, work and work, but to do what is important, be efficient, and put first things first
“If I had eight hours to chop down a tree, I'd spend six hours sharpening my axe”
And this clearly indicates us not to consume ourselves in work, work and work, but to do what is important, be efficient, and put first things first
Stephen Covey's Time Management Matrix
The published image is The Time Management Matrix by Stephen R. Covey, only if we decide which quadrant to stay in, we can definitely be effective and successful, and until we manage ourselves, no Time Management Seminar can help us !
As you see
The Quadrant One shows problems that are both urgent and important, those that need to be done and need to be done immediately. Here the dilemma is that many people, especially the ones with our "Desi" approach of "working hard and restlessly" take most of the issues facing them to be Quadrant One problems, the problem is such people get consumed by over-work and there is ABSOLUTELY NO BALANCE. Ultimately they take refuge in the Quadrant Four.
The Quadrant Four Shows problems that are neither important nor urgent. Many people place majority of their problems in Quadrant Four, and the result is obvious, this Lazy Bluffer routine causes them TO RUST
The Quadrant Three shows problems that are not really important but unluckily we have to deal with them. We need to get rid of a disturbing phone call by attending to it. We need to resort to many popular activities on peer pressure. And we do have to face and tackle all this. But that CAUSES YOU TO BE UNFOCUSSED !! The best way to deal with such issues is not to let them carry you away, or to minimise them if not completely ignore them
Now, the important thing is-- the point of focus is -- that the above mentioned issues don't let us have any balance in our life. We lose focus, become either over-worked or become Totally wasted or unfocussed.
What We need To Do Is To
FOCUS ON THE QUADRANT TWO
This quadrant focuses on the things that need to be done, that are important for us, but they are not pressing on us. We are doing them relaxingly, exerting our positive energy taking our time, and focussing on BALANCE.
And for this, we need to be pro-active, we should have the courage to understand and change what false images have been given to us by our social mirror and what needs to be changed. Plus we have to understand that we are the masters of our own fate. No one can lead us or manage us but WE, and following all this we can definitely have energy and balance in everything we do, plus we can have strong relationships as well. FOCUS ON WORKING SMART NOT WORKING HARD
And thats' the key to work-life balance as well that I mentioned in one of my previous posts !!!
Source : 7 habits of Highly Effective People by Stephen R.Covey
What is the difference between marketing and sales?
Let's think about this question for a moment. Without marketing you would not have prospects or leads to follow up with, but yet without a good sales technique and strategy your closing rate may depress you.
Marketing is everything that you do to reach and persuade prospects. The sales process is everything that you do to close the sale and get a signed agreement or contract. Both are necessities to the success of a business. You cannot do without either process. By strategically combining both efforts you will experience a successful amount of business growth. However, by the same token if the efforts are unbalanced it candetour your growth.
Your marketing will consists of the measures you use to reach and persuade your prospects that you are the company for them. It's the message that prepares the prospect for the sales. It consists of advertising, public relations, brand marketing, viral marketing, and direct mail.
The sales process consists of interpersonal interaction. It is often done by a one-on-one meeting, cold calls, and networking. It's anything that engages you with the prospect or customer on a personal level rather than at a distance.
Your marketing efforts begin the process of the eight contacts that studies show it takes to move a prospect or potential client to the close of the sale. If marketing is done effectively you can begin to move that prospect from a cold to a warm lead. When the prospect hitsthe"warm" level it's much easier for the sales professional to close the sale.
Marketing is everything that you do to reach and persuade prospects. The sales process is everything that you do to close the sale and get a signed agreement or contract. Both are necessities to the success of a business. You cannot do without either process. By strategically combining both efforts you will experience a successful amount of business growth. However, by the same token if the efforts are unbalanced it candetour your growth.
Your marketing will consists of the measures you use to reach and persuade your prospects that you are the company for them. It's the message that prepares the prospect for the sales. It consists of advertising, public relations, brand marketing, viral marketing, and direct mail.
The sales process consists of interpersonal interaction. It is often done by a one-on-one meeting, cold calls, and networking. It's anything that engages you with the prospect or customer on a personal level rather than at a distance.
Your marketing efforts begin the process of the eight contacts that studies show it takes to move a prospect or potential client to the close of the sale. If marketing is done effectively you can begin to move that prospect from a cold to a warm lead. When the prospect hitsthe"warm" level it's much easier for the sales professional to close the sale.
THE RULES
- The FEMALE always makes THE RULES.
- THE RULES are subject to change at any time without prior notice.
- NO MALE can possibly know all THE RULES.
- If the FEMALE suspects the MALE knows all THE RULES. She must immediately change some or all THE RULES.
- The FEMALE is never wrong.
- If the FEMALE is wrong it is due to a misunderstanding which was the direct result of something the MALE said or did.
- The MAle must apologise for causing said misunderstanding.
- The MALE is always wrong.
- The MALE may be right if he agrees with the FEMALE unless she wants him to disagree.
- The FEMALE may change her mind at any time.
- The MALE never changes his mind witout the express written consent of the FEMALE.
- The FEMALE has every right to be angry or upset at any time.
- The MALE must remain calm at all time unless the FEMALE wants him to be angry and/or upset.
- The FEMALE must under no circumstances let the MALE know whether she wants him to be angry and/or upset.
- The MALE is expected to mind read at all times.
Hey guys!this post is only for fun so read these funny rules n enjoy.I am not differenaited males n females it just for fun so dont take it seriously.........
Saturday, November 14, 2009
BUSINESS BUYER BEHAVIOUR (INDUSTRIAL BUYER BEHAVIOUR)
The shaping of business decisions by the purchaser of raw materials, components industrial equipment, and services for an organization. the amount of time devoted to the process will depend on a number of factors, including the importance of the decision, the cost to the organization of the decision, the alternative products or sevices available, and the purchasing officer's experience. three situations are recognized:
1) Straight rebuy: a familiar product (eg. stationery or electricity) is bought from a regular supplier.
2) Modified rebuy: looking around for a product with improved performance, perhaps reflecting dissatisfaction with current suppliers.
3) New task buying: thbuyer, on behalf of the organization, s attempting to fulfill a need or solve a problem that has not been previously encountered. The higher the risk factor involved in a purchase(e.g new production equipment, an innovative robotic machine), he larger will be the team forming the decision making unit (DMU) involved.
www.encyclopedia.com
1) Straight rebuy: a familiar product (eg. stationery or electricity) is bought from a regular supplier.
2) Modified rebuy: looking around for a product with improved performance, perhaps reflecting dissatisfaction with current suppliers.
3) New task buying: thbuyer, on behalf of the organization, s attempting to fulfill a need or solve a problem that has not been previously encountered. The higher the risk factor involved in a purchase(e.g new production equipment, an innovative robotic machine), he larger will be the team forming the decision making unit (DMU) involved.
www.encyclopedia.com
Internet Marketing Techniques-- The Top 10 Best Practices - How to succeed Online?
Whether you are new to the internet business game or you’ve had your own company for years, you want to get the most out of your marketing attempts. If you stick by Internet Marketing Techniques - The Top 10 Best Practices that are listed below, you’ll see huge returns on your efforts.
1. Take care of your customers. This is the essential piece of business that shouldn’t need to be said but unfortunately it does. Lots of people who run their own businesses just don’t put enough thought or attention on their customers.
2. Market articles. Article marketing is huge. Write smart articles that are keyword rich and make sure that you create back links and use a resource box at the end of every article.
3. Use article directories. Once you’ve got well written articles, you need to get them published and out to the masses so that you can begin drawing business and curiosity from prospective clients with your articles. Use the Top Three article directories, to start with.
4. Keywords and key phrases-use them. Make sure that you’re not just writing about a topic, make sure you’re getting people to read the article and come to the site. When you do a little research, you can find the best words and phrases to use. Check out the competition-find out what is working for them and follow their lead. Don’t over use your words; however, you don’t want to chase people off. Make the words flow naturally throughout your articles and site. Keywords and phrases-use them, don’t abuse them.
5. Use blogs. There’s nothing quite as useful as word of mouth advertising and product or site endorsement. Basically, blogs are great big billboards for anything that people want to broadcast. Make sure to hit the blogs heavily to get your company name and site out to the most people.
6. Create personal pages on all social networking sites. There is a lot that you can do with the help of social networking sites. To begin a multi point attack by using these sites, you need to start by creating personal pages on each and every site you possibly can. From your personal pages, you can move on to business pages and then branch out to your niche market keywords and pages.
7. Make sure to rotate keywords and information. You should have fresh information going, don’t change things up too frequently, though. You will be able to figure out a good interval to change your information out after your site is up and running. There’s nothing wrong with keeping your eye on the competition. Follow their lead and make changes that work for you.
8. Get your friends on board. Don’t ask your friends for shameless publicity, no one will want to be your friend if you do this, but make sure that those who know and love your products pass the good word on to others that they know. If someone is looking for something in particular, why shouldn’t your friends drop your name and say hey, give them a try!
9. Make the most of affiliates. Use affiliate marketing to help you get ahead. You can get more hits to your page by having cross linked information and you’ll sell more product when others can sell it for you.
10. Advertise on free or low cost pages. Make sure you get your name in front of as many people as possible by posting ads on free boards or advertising sites that don’t charge you an arm and a leg.
If you follow these Internet Marketing Techniques - The Top 10 Best Practices, you can bet that you will see more traffic and more sales, quickly!
Reference: Scedu.com
1. Take care of your customers. This is the essential piece of business that shouldn’t need to be said but unfortunately it does. Lots of people who run their own businesses just don’t put enough thought or attention on their customers.
2. Market articles. Article marketing is huge. Write smart articles that are keyword rich and make sure that you create back links and use a resource box at the end of every article.
3. Use article directories. Once you’ve got well written articles, you need to get them published and out to the masses so that you can begin drawing business and curiosity from prospective clients with your articles. Use the Top Three article directories, to start with.
4. Keywords and key phrases-use them. Make sure that you’re not just writing about a topic, make sure you’re getting people to read the article and come to the site. When you do a little research, you can find the best words and phrases to use. Check out the competition-find out what is working for them and follow their lead. Don’t over use your words; however, you don’t want to chase people off. Make the words flow naturally throughout your articles and site. Keywords and phrases-use them, don’t abuse them.
5. Use blogs. There’s nothing quite as useful as word of mouth advertising and product or site endorsement. Basically, blogs are great big billboards for anything that people want to broadcast. Make sure to hit the blogs heavily to get your company name and site out to the most people.
6. Create personal pages on all social networking sites. There is a lot that you can do with the help of social networking sites. To begin a multi point attack by using these sites, you need to start by creating personal pages on each and every site you possibly can. From your personal pages, you can move on to business pages and then branch out to your niche market keywords and pages.
7. Make sure to rotate keywords and information. You should have fresh information going, don’t change things up too frequently, though. You will be able to figure out a good interval to change your information out after your site is up and running. There’s nothing wrong with keeping your eye on the competition. Follow their lead and make changes that work for you.
8. Get your friends on board. Don’t ask your friends for shameless publicity, no one will want to be your friend if you do this, but make sure that those who know and love your products pass the good word on to others that they know. If someone is looking for something in particular, why shouldn’t your friends drop your name and say hey, give them a try!
9. Make the most of affiliates. Use affiliate marketing to help you get ahead. You can get more hits to your page by having cross linked information and you’ll sell more product when others can sell it for you.
10. Advertise on free or low cost pages. Make sure you get your name in front of as many people as possible by posting ads on free boards or advertising sites that don’t charge you an arm and a leg.
If you follow these Internet Marketing Techniques - The Top 10 Best Practices, you can bet that you will see more traffic and more sales, quickly!
Reference: Scedu.com
Limitations of the Marketing Mix Framework
The marketing mix framework was particularly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. Today, with marketing more integrated into organizations and with a wider variety of products and markets, some authors have attempted to extend its usefulness by proposing a fifth P, such as packaging, people, process, etc. Today however, the marketing mix most commonly remains based on the 4 P's. Despite its limitations and perhaps because of its simplicity, the use of this framework remains strong and many marketing textbooks have been organized around it.
source: http://www.netmba.com/marketing/mix/
source: http://www.netmba.com/marketing/mix/
Distinguish Between a Wholesaler and Retailer
Wholesaler donates a type of middlemen between the producers and retailers. They generally sell goods and commodities to the retailers, industrial consumers and professional users. There are two types of wholesaler like manufacturer agents and merchant wholesalers.Retailer denotes the last linkage in the channel of distribution between the producers and the consumers.
The following difference between wholesalers and retailers are
Wholesaler:
•It is the first link in the chain of distribution which links between manufactures and retailers.
•The wholesaler trade is conducted in bulk quantities.
•Most of the transactions are effected on the basis of credit.
•The capital requirement of this business is heavy.
•This type of trade deals in specific goods.
•It does not emphasize on proper display of goods.
•It does not experience direct dealing with consumers.
•It avails the economics of bulk purchasing.
•They operate in big cities and towns.
•It does not give emphasis on home delivery facility.
•It does not provide facility.
•It does not provide after sale service.
Retailer:
•It is the last link in the chain of distribution which links wholesalers and consumers.
•It is conducted in small quantities.
•Most of the transactions take place on cash basis.
•This type of business usually require less capital.
•This type of trade deals in variety of goods.
•It gives a lot of emphasis on proper display and advertisement.
•It always deals directly with the ultimate consumers.
•It does not avail such economies because it does not incur bulk purchase of goods.
•They operate in small villages and in big cities.
•It gives much emphasis on home delivery facility.
•It provides after sale service to the consumers.
Wholesaler are those who buy product from the producer and sell to retailers and retailers are those who sell the product to the customers.Wholesalers are only in bigcities but retailer are also in small villages to sell product to customers.
reference:http://www.rajputbrotherhood.com/knowledge-hub/business-studies/distinguish-between-a-wholesaler-and-retailer.html
The following difference between wholesalers and retailers are
Wholesaler:
•It is the first link in the chain of distribution which links between manufactures and retailers.
•The wholesaler trade is conducted in bulk quantities.
•Most of the transactions are effected on the basis of credit.
•The capital requirement of this business is heavy.
•This type of trade deals in specific goods.
•It does not emphasize on proper display of goods.
•It does not experience direct dealing with consumers.
•It avails the economics of bulk purchasing.
•They operate in big cities and towns.
•It does not give emphasis on home delivery facility.
•It does not provide facility.
•It does not provide after sale service.
Retailer:
•It is the last link in the chain of distribution which links wholesalers and consumers.
•It is conducted in small quantities.
•Most of the transactions take place on cash basis.
•This type of business usually require less capital.
•This type of trade deals in variety of goods.
•It gives a lot of emphasis on proper display and advertisement.
•It always deals directly with the ultimate consumers.
•It does not avail such economies because it does not incur bulk purchase of goods.
•They operate in small villages and in big cities.
•It gives much emphasis on home delivery facility.
•It provides after sale service to the consumers.
Wholesaler are those who buy product from the producer and sell to retailers and retailers are those who sell the product to the customers.Wholesalers are only in bigcities but retailer are also in small villages to sell product to customers.
reference:http://www.rajputbrotherhood.com/knowledge-hub/business-studies/distinguish-between-a-wholesaler-and-retailer.html
Friday, November 13, 2009
Some advertising laws worth knowing
You should know the following laws regarding advertising to avoid damage
Misrepresentation of the product
All descriptive text and photos must give consumers an accurate representation of what they will get. If you are selling frozen ice cream bars, for instance, you can’t show a picture of five bars on the box, if the box only contains four. Nor can you touch up photos to make a product look better or bigger than it is.
No facts about the product can be misrepresented either. Two business owners learned that the hard way when they were fined $20,000 each for claiming Native-American style artwork they sold was made by Native Americans when, in fact, it wasn’t.
Unsubstantiated claims
You must be able to substantiate factual claims with proof that there is a reasonable basis for each one. A New Jersey talent agency, for instance, was fined more than $175,000 over several years for misrepresenting its ability to place children in high-paying modeling and acting jobs. The substantiation must exist before you make the claims.
The fact that someone might be able to realize the benefits you state in your ads, or that one or two individuals have achieved the advertised results won’t suffice when claims lead people to believe that the average purchaser could achieve the touted benefits.
If you make claims such as “recommended by doctors,” or “tests prove” or “leading experts say...” you must have proof that will stand up to scrutiny by experts.
You need a high level of substantiation if you are making health, nutrition, or safety claims. In such cases you need reliable scientific evidence. To provide that, you should have at least one independent double-blind study to support your claim. The study group also should be of sufficient size to provide reliable data.
Fake testimonials
If you use testimonials in your advertising, the people making the testimonial must actually use your product or service. If you pay them for their testimonial that fact has to be disclosed unless the person giving the endorsement is a well-known person or an expert.
Simulations of real situations
If you retouch before-and-after photos, such as showing someone cleaning a floor with one swipe of a mop when it really would have taken five, or use something other than what is stated to demonstrate your product, the facts must be disclosed.
Price and merchandise comparisons
If you use words like “sale,” “reduced,” “$150 value,” you must have actually offered the product at that price for a reasonable period of time.
Similarly, if you say a product you are selling is “Sold elsewhere for $30 more” you must be able to prove that the item actually has been sold at that price. Terms like “special purchase” or “inventory clearance” should be reserved for times when you actually have bought merchandise at a special purchase price or are actually clearing out your inventory.
Warranties and guarantees
You don’t have to advertise a warranty or guarantee, but if you do, you must state the terms and any limitations that apply. If you sell by mail, and will refund the purchase price if a customer is unsatisfied, but not the shipping and handling costs, your guarantee must make that clear too.
Reference: http://www.businessknowhow.com/businessideas/advertising/advertising_laws_you_need_to_know.php
Misrepresentation of the product
All descriptive text and photos must give consumers an accurate representation of what they will get. If you are selling frozen ice cream bars, for instance, you can’t show a picture of five bars on the box, if the box only contains four. Nor can you touch up photos to make a product look better or bigger than it is.
No facts about the product can be misrepresented either. Two business owners learned that the hard way when they were fined $20,000 each for claiming Native-American style artwork they sold was made by Native Americans when, in fact, it wasn’t.
Unsubstantiated claims
You must be able to substantiate factual claims with proof that there is a reasonable basis for each one. A New Jersey talent agency, for instance, was fined more than $175,000 over several years for misrepresenting its ability to place children in high-paying modeling and acting jobs. The substantiation must exist before you make the claims.
The fact that someone might be able to realize the benefits you state in your ads, or that one or two individuals have achieved the advertised results won’t suffice when claims lead people to believe that the average purchaser could achieve the touted benefits.
If you make claims such as “recommended by doctors,” or “tests prove” or “leading experts say...” you must have proof that will stand up to scrutiny by experts.
You need a high level of substantiation if you are making health, nutrition, or safety claims. In such cases you need reliable scientific evidence. To provide that, you should have at least one independent double-blind study to support your claim. The study group also should be of sufficient size to provide reliable data.
Fake testimonials
If you use testimonials in your advertising, the people making the testimonial must actually use your product or service. If you pay them for their testimonial that fact has to be disclosed unless the person giving the endorsement is a well-known person or an expert.
Simulations of real situations
If you retouch before-and-after photos, such as showing someone cleaning a floor with one swipe of a mop when it really would have taken five, or use something other than what is stated to demonstrate your product, the facts must be disclosed.
Price and merchandise comparisons
If you use words like “sale,” “reduced,” “$150 value,” you must have actually offered the product at that price for a reasonable period of time.
Similarly, if you say a product you are selling is “Sold elsewhere for $30 more” you must be able to prove that the item actually has been sold at that price. Terms like “special purchase” or “inventory clearance” should be reserved for times when you actually have bought merchandise at a special purchase price or are actually clearing out your inventory.
Warranties and guarantees
You don’t have to advertise a warranty or guarantee, but if you do, you must state the terms and any limitations that apply. If you sell by mail, and will refund the purchase price if a customer is unsatisfied, but not the shipping and handling costs, your guarantee must make that clear too.
Reference: http://www.businessknowhow.com/businessideas/advertising/advertising_laws_you_need_to_know.php
Top Advertising Tips !!!
Here are some tips for a successful advertising campaign
1. Go after your target audience
2. Highlight your competitive advantgae
3. Establish an image
4. You have to spend money to make money
5. Advertise in the right place
6. Dont allow your budget to run your advertising campaign
7. Diversify
8. Don't try to be everything for every one
9. Test your ads in advance
10. Monitor your ads
1. Go after your target audience
2. Highlight your competitive advantgae
3. Establish an image
4. You have to spend money to make money
5. Advertise in the right place
6. Dont allow your budget to run your advertising campaign
7. Diversify
8. Don't try to be everything for every one
9. Test your ads in advance
10. Monitor your ads
Market segmentation
A market segment is a group of people or organizations sharing one or more characteristics that cause them to have similar product and/or service needs. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups.
What is leverage?
The FOREX deals are accomplished in lots and each lot consists of 100,000 units of any particular foreign currency. To purchase one single lot of foreign exchange is required and that may run into hundreds of thousands of dollars which means the small investors are left out of the fray. For this very purpose the concept of leverage was introduced in the FOREX trade.
Leverage backed with credit, such as a margin account, is very common. Usually the leverage in the margined account is collateralized by the initial deposit made by you in that account. If the value of the trade goes down significantly, the broker may ask you to either deposit more cash, or sell a portion of your holding. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading. For example, a ratio of 100:1 means your broker would lend you $100 for every $1 of actual capital. Many brokerages offer as much as 250:1.
Margin requirements and interest vary among broker/dealers. The amount of leverage you use will depend on your broker and what you feel comfortable with. You can get leverage from a high as 1% with some brokers. This means you can control $100,000 with the investment of only $1,000. The broker sets a minimum account size also known as account margin or initial investment. Once you have deposited the required sum you will be able to trade in the FOREX market.
Leverage backed with credit, such as a margin account, is very common. Usually the leverage in the margined account is collateralized by the initial deposit made by you in that account. If the value of the trade goes down significantly, the broker may ask you to either deposit more cash, or sell a portion of your holding. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading. For example, a ratio of 100:1 means your broker would lend you $100 for every $1 of actual capital. Many brokerages offer as much as 250:1.
Margin requirements and interest vary among broker/dealers. The amount of leverage you use will depend on your broker and what you feel comfortable with. You can get leverage from a high as 1% with some brokers. This means you can control $100,000 with the investment of only $1,000. The broker sets a minimum account size also known as account margin or initial investment. Once you have deposited the required sum you will be able to trade in the FOREX market.
DISTRIBUTING THE PRODUCTS
Some products are marketed most effectively by direct sale from manufacturer to consumer. Among these are durable equipment such as computers, office equipment, industrial machinery and supplies, and consumer specialties such as vacuum cleaners and life insurance. The direct marketing of products such as cosmetics and household needs is very important. Formerly common “door to door products,” these are now usually sold by the more sophisticated “house party” technique.
Many types of products and services now use direct mail catalogs or have a presence on the World Wide Web. Because many people are extremely busy, they may find it simpler to shop in their leisure hours at home by using catalogs or visiting Web sites. Comparison shopping is also made easier, because both catalogs and e-commerce sites generally contain extensive product information. For retailers, catalogs and the Web make it possible to do business far beyond their usual trading area and with a minimum of overhead. More than 95 percent of the leading 1,000 companies in the United States sell products over the Internet.
Television is a potent tool in direct marketing because it facilitates the demonstration of products in use. Direct sale of all kinds of goods to the public via home-shopping clubs broadcasting on cable television channels is gaining in popularity. Some companies also use telephone marketing, called telemarketing, a technique used in selling to businesses as well as to consumers. Most consumer products, however, move from the manufacturer through agents to wholesalers and then to retailers, ultimately reaching the consumer. Determining how products should move through wholesale and retail organizations is another major marketing decision.
Wholesalers distribute goods in large quantities, usually to retailers, for resale. Some retail businesses have grown so large, however, that they have found it more profitable to bypass the wholesaler and deal directly with the manufacturers or their agents. Wholesalers first responded to this trend by changing their operations to move goods more quickly to large retailers and at lower prices. Small retailers fought back through cooperative wholesaling, the voluntary banding together of independent retailers to market a product. The result has been a trend toward a much closer, interlocking relationship between wholesaler and independent retailer.
Retailing has undergone even more changes than wholesaling. Intensive preselling by manufacturers and the development of minimum-service operations, such as self-service in department stores, have drastically changed the retailer’s way of doing business. Supermarkets and discount stores have become commonplace not only for groceries but for products as diversified as medicines and gardening equipment. More recently, warehouse retailing has become a major means of retailing higher-priced consumer goods such as furniture, appliances, and electronic equipment. The emphasis is on generating store traffic, speeding up the transaction, and rapidly expanding the sales volume. Chain stores—groups of stores with one owner—and cooperative groups have also proliferated. Special types of retailing, such as vending machines and convenience stores, have also developed to fill multiple needs. See Retailing.
Transporting and warehousing merchandise are also technically within the scope of marketing. Products are often moved several times as they go from producer to consumer. Products are carried by rail, truck, ship, airplane, and pipeline. Efficient traffic management determines the best method and timetable of shipment for any particular product.
link:microsoft encarta
Many types of products and services now use direct mail catalogs or have a presence on the World Wide Web. Because many people are extremely busy, they may find it simpler to shop in their leisure hours at home by using catalogs or visiting Web sites. Comparison shopping is also made easier, because both catalogs and e-commerce sites generally contain extensive product information. For retailers, catalogs and the Web make it possible to do business far beyond their usual trading area and with a minimum of overhead. More than 95 percent of the leading 1,000 companies in the United States sell products over the Internet.
Television is a potent tool in direct marketing because it facilitates the demonstration of products in use. Direct sale of all kinds of goods to the public via home-shopping clubs broadcasting on cable television channels is gaining in popularity. Some companies also use telephone marketing, called telemarketing, a technique used in selling to businesses as well as to consumers. Most consumer products, however, move from the manufacturer through agents to wholesalers and then to retailers, ultimately reaching the consumer. Determining how products should move through wholesale and retail organizations is another major marketing decision.
Wholesalers distribute goods in large quantities, usually to retailers, for resale. Some retail businesses have grown so large, however, that they have found it more profitable to bypass the wholesaler and deal directly with the manufacturers or their agents. Wholesalers first responded to this trend by changing their operations to move goods more quickly to large retailers and at lower prices. Small retailers fought back through cooperative wholesaling, the voluntary banding together of independent retailers to market a product. The result has been a trend toward a much closer, interlocking relationship between wholesaler and independent retailer.
Retailing has undergone even more changes than wholesaling. Intensive preselling by manufacturers and the development of minimum-service operations, such as self-service in department stores, have drastically changed the retailer’s way of doing business. Supermarkets and discount stores have become commonplace not only for groceries but for products as diversified as medicines and gardening equipment. More recently, warehouse retailing has become a major means of retailing higher-priced consumer goods such as furniture, appliances, and electronic equipment. The emphasis is on generating store traffic, speeding up the transaction, and rapidly expanding the sales volume. Chain stores—groups of stores with one owner—and cooperative groups have also proliferated. Special types of retailing, such as vending machines and convenience stores, have also developed to fill multiple needs. See Retailing.
Transporting and warehousing merchandise are also technically within the scope of marketing. Products are often moved several times as they go from producer to consumer. Products are carried by rail, truck, ship, airplane, and pipeline. Efficient traffic management determines the best method and timetable of shipment for any particular product.
link:microsoft encarta
Service , Marketing and Building Relationship
Marketing efforts once focused primarily on the selling of manufactured products such as cars and aspirin. But today the service industries have grown more important to the economy than the manufacturing sector. Services, unlike products, are intangible and involve a deed, a performance, or an effort that cannot be physically possessed. Currently, more people are employed in the provision of services than in the manufacture of products, and this area shows every indication of expanding even further. In fact, more than eight in ten U.S. workers labor in such service areas as transportation, retail, health care, entertainment, and education. In the United States alone, service industries now account for more than 70 percent of the gross national product (GNP, the total of all goods and services produced by a country) and are expected to provide 90 percent of all new jobs by 2012.
Services, like products, require marketing. Usually, service marketing parallels product marketing with the exception of physical handling. Services must be planned and developed carefully to meet consumer demand. For example, in the field of temporary personnel, a service that continues to increase in monetary value, studies are made to determine the types of employee skills needed in various geographical locations and fields of business. Because services are more difficult to sell than physical products, promotional campaigns for services must be even more aggressive than those for physical commodities.
In the past, most advertising and promotional efforts were developed to acquire new customers. But today, more and more advertising and promotional efforts are designed to retain current customers and to increase the amount of money they spend with the company. Consumers see so much advertising that they have learned to ignore much of it. As a result, it has become more difficult to attract new customers. Servicing existing customers, however, is easier and less expensive. In fact, it is estimated that acquiring a new customer costs five to eight times as much as keeping an existing one.
To retain current customers, some companies develop loyalty programs such as the frequent flyer programs used by many airlines. A marketer may also seek to retain customers by learning a customer’s individual interests and then tailoring services to meet them. Amazon.com, for example, keeps a database of the types of books customers have ordered in the past and then recommends new books to them based on their past selections. Such programs help companies retain customers not only by providing a useful service, but also by making customers feel appreciated. This is known as relationship building.
link:microsoft encarta
Services, like products, require marketing. Usually, service marketing parallels product marketing with the exception of physical handling. Services must be planned and developed carefully to meet consumer demand. For example, in the field of temporary personnel, a service that continues to increase in monetary value, studies are made to determine the types of employee skills needed in various geographical locations and fields of business. Because services are more difficult to sell than physical products, promotional campaigns for services must be even more aggressive than those for physical commodities.
In the past, most advertising and promotional efforts were developed to acquire new customers. But today, more and more advertising and promotional efforts are designed to retain current customers and to increase the amount of money they spend with the company. Consumers see so much advertising that they have learned to ignore much of it. As a result, it has become more difficult to attract new customers. Servicing existing customers, however, is easier and less expensive. In fact, it is estimated that acquiring a new customer costs five to eight times as much as keeping an existing one.
To retain current customers, some companies develop loyalty programs such as the frequent flyer programs used by many airlines. A marketer may also seek to retain customers by learning a customer’s individual interests and then tailoring services to meet them. Amazon.com, for example, keeps a database of the types of books customers have ordered in the past and then recommends new books to them based on their past selections. Such programs help companies retain customers not only by providing a useful service, but also by making customers feel appreciated. This is known as relationship building.
link:microsoft encarta
Multi-level marketing (MLM)
Multi-level marketing (MLM), (also called network marketing) is a term that describes a marketing structure used by some companies as part of their overall marketing.
The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduce to the company, creating a down line of distributors and a hierarchy of multiple levels of compensation in the form of a pyramid.
The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing.
The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduce to the company, creating a down line of distributors and a hierarchy of multiple levels of compensation in the form of a pyramid.
The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing.
Criticism of MLM
The Federal Trade Commission (FTC) issued a decision, In re Amway Corp., in 1979 in which it indicated that multi-level marketing was not illegal per seen the United States. However, Amway was found guilty of price fixing (by requiring "independent" distributors to sell at the low price) and making exaggerated income claims.
The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as "pyramiding". In April 2006, it proposed a Business Opportunity Rule intended to require all sellers of business opportunities—including MLMs—to provide enough information to enable prospective buyers to make an informed decision about their probability of earning money.
In March 2008, the FTC removed Network Marketing (MLM) companies from the proposed Business Opportunity Rule:
The revised proposal, however, would not reach multi-level marketing companies or certain companies that may have been swept inadvertently into scope of the April 2006 proposal.
Another criticism of MLMs is that "MLM organizations have been described by some as cults (Butterfield, 1985), pyramid schemes (Fitzpatrick & Reynolds, 1997), or organizations rife with misleading, deceptive, and unethical behavior (Carter, 1999), such as the questionable use of evangelical discourse to promote the business (Hopfl & Maddrell, 1996), and the exploitation of personal relationships for financial gain (Fitzpatrick & Reynolds, 1997)."
MLM's are also criticized for being unable to fulfill their promises for the majority of participants due to basic conflicts with Western culture. There are even claims that the success rate for breaking even or even making money are far worse than other types of businesses: "The vast majority of MLM’s are recruiting MLM’s, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLM’s is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company.” In part, this is because encouraging recruits to further "recruit people to compete with [them]"[leads to "market saturation."
Similar claims regarding profits have been stated by The Times ("The Government investigation claims to have revealed that just 10 per cent of Amway’s agents in Britain make any profit, with less than one in ten selling a single item of the group’s products.", high level "Emerald" Amway member Scheibeler ("UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, 'only about 90 made sufficient incomes to cover the costs of actively building their business.' That's a 99.7 percent loss rate for investors." ](case referred to is BERR vs Amway (Case No: 2651, 2652 and 2653 of 2007) which does list this as one of the points of objection ability: "c) because of the requirement that an IBO pay a joining and renewal fee and the likelihood that an IBO would purchase BSM there was a certainty that the Amway business would cause a loss to a large number of people (to the extent that out of an IBO population which exceeded 33,000 only building their business).") and Newsweek (where it is stated based on MonaVie's own 2007 income disclosure statement "fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week.)"
"In the USA, the average annual income from MLM for 90% MLM members is no more than US$5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)"[
"While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400.
Setup
Independent, unsalaried salespeople of multi-level marketing, referred to as distributors (or associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, etc.), represent the company that produces the products or provides the services they sell. They are awarded a commission based upon the volume of product sold through their own sales efforts as well as that of their down line organization.
Independent distributors develop their organizations by either building an active customer base, who buy direct from the company, or by recruiting a down line of independent distributors who also build a customer base, thereby expanding the overall organization. Additionally, distributors can also earn a profit by retailing products they purchased from the company at wholesale price.
This arrangement of distributors earning a commission based on the sales of their independent efforts as well as the leveraged sales efforts of their down line is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchiser as well as to an area or regional manager. Commissions are paid to multi-level marketing distributors according to the company’s compensation plan. There can be individuals at multiple levels of the structure receiving royalties from a single person's sales.
Legitimacy
MLM businesses operate in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid schemes try to present themselves as legitimate MLM businesses.
Because pyramiding (getting commissions from recruiting new members including "sign-up fees") is illegal in most states, to remain legitimate in the U.S. a company that uses multi-level marketing has to make sure commissions are earned only on sales of the company's products or services if they cross state boundaries. If participants are paid primarily from money received from new recruits, or if they are required to buy more product than they are likely to sell, then the company may be a pyramid scheme, which is illegal in most countries.
New salespeople may be asked to pay for their own training and marketing materials, or to buy a significant amount of inventory. A commonly adopted test of legality is that MLMs follow the so-called 70% rule which prevents members "inventory loading" in order to qualify for additional bonuses. The 70% rule requires participants to sell 70% of previously purchased inventory before placing new orders with the company. There are however variations in interpretations of this rule. Some attorneys insist that 70% of purchased inventory should be sold to people who are not participants in the business, while many MLM companies allow for self-consumption to be a significant part of the sales of a participant.
The European Union's Unfair Commercial Practices Directive explicitly includes self-consumption as legitimate.
In a 2004 United States Federal Trade Commission (FTC) Staff Advisory letter to the Direct Selling Association states:
Much has been made of the personal, or internal, consumption issue in recent years. In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.
In a 2007 Wall Street Journal interview, FTC economist Peter Vander Nat stated, "If people are buying because they want to use a company’s products, those sales can count as retail."
The FTC offers advice for potential MLM members to help them identify those which are likely to be pyramid schemes.
Compensation plans
Companies have devised a variety of MLM compensation plans over the decades.
§ Unilevel plans This type of plan is often considered the simplest of compensation plans. As the name suggests, the plan allows a person to sponsor one line of distributors, called a "frontline." Every distributor the person sponsors is considered to be on that sponsor's frontline and there are no widths limitations, meaning there is no limit to the amount of people one can sponsor in the frontline. The common goal of this plan is to recruit a large number of frontline distributors and then encourage them to do the same. This is due to the fact that commissions are normally paid out on a limited depth, which typically means sponsor can earn commissions on sales between 5 and 7 levels deep.
§ Stairstep Breakaway plans this type of plan is characterized as having representatives who are responsible for both personal and group sales volumes. Volume is created by recruiting and by retailing product. Various discounts or rebates may be paid to group leaders and a group leader can be any representative with one or more down line recruits. Once predefined personal and/or group volumes are achieved, a representative moves up a commission level. This continues until the representative's sales volume reaches the top commission level and "breaks away" from their up line. From that point on, the new group is no longer considered part of his uplink’s group and the multi-level compensation aspect ceases. The original up line usually continues to be compensated through override commissions and other incentives.
§ Matrix plans this type of plan is similar to a Uni-Level plan, except there is also a limited number of representatives who can be placed on the first level. Recruits beyond the maximum number of first level positions allowed are automatically placed in other down line (lower level) positions. Matrix plans often have a maximum width and depth. When all positions in a representative's down line matrix are filled (maximum width and depth is reached for all participants in a matrix), a new matrix may be started. Like Uni-Level plans, representatives in a matrix earn unlimited commissions on limited levels of volume with minimal sales quotas.
§ Binary plans: A binary plan is a multilevel marketing compensation plan which allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributor's front-line. This "spillover" is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. The primary limitation is that distributors must "balance" their two downlink legs to receive commissions. Balancing legs typically requires that the number of sales from one down line leg constitute no more than a specified percentage of the distributor's total sales.
referance: wikipedi.org/wiki/Multi-level_marketing
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