Tag: Wealth Management BMS Mumbai University Notes

An internet search, otherwise known as a search query, is an entry into a search engine that yields both paid and organic results. The paid results are the ads that appear at the top and the bottom of the page, and they are marked accordingly. The organic results are the unmarked results that appear in between the ads.

At the core of an internet search is a keyword. In turn, keywords are at the hearts of search engine marketing (SEM) and search engine optimization (SEO).

Search engine marketing, also known as paid search, is the practice of advertising on search engine results pages (SERPs). All the major search engines offer ad space, and the most prominent platform is Google Ads (formerly known as AdWords). Google Ads is a pay-per-click platform: an advertiser pays every time someone clicks on its advertisement.

There are many different search engines you can use, but some of the most popular include Google, Yahoo!, and Bing. To perform a search, you’ll need to navigate to a search engine in your web browser, type one or more keywords also known as search terms then press Enter on your keyboard. In this example, we’ll search for recipes.

After you run a search, you’ll see a list of relevant websites that match your search terms. These are commonly known as search results. If you see a site that looks interesting, you can click a link to open it. If the site doesn’t have what you need, you can simply return to the results page to look for more options.

Most browsers also allow you to perform a web search directly from your address bar, although some have a separate search bar next to the address bar. Simply type your search terms and press Enter to run the search.

The web address contains information about the location of the webpage. It is also known as the URL (uniform resource locator).

URL is the short form for Uniform Resource Locator, a website URL is the location of a specific website, page, or file on the Internet. Every URL is made up of multiple parts, and the way yours are built will have a variety of effects on your site’s security and Search Engine Optimization (SEO).

For example, if you enter https://indiafreenotes.com/value-innovation-co-creation-of-value/ in your web browser, your web browser will take you to this post. But if you just enter https://indiafreenotes.com/, you get taken to the indiafreenotes homepage.

Basic elements of a website URL:

• The protocol; HTTP or HTTPS.
• The domain name (including the TLD) that identifies a site.
• The path leading to a specific web page.

SMTP

Simple Mail Transfer Protocol (SMTP) is the standard protocol for sending emails across the Internet.

By default, the SMTP protocol works on three ports:

Port 25: This is the default SMTP non-encrypted port;

Port 2525: This port is opened on all servers in case port 25 is filtered (by your ISP for example) and you want to send non-encrypted emails with SMTP;

Port 465: This is the port used if you want to send messages using SMTP securely.

IMAP

The Internet Message Access Protocol (IMAP) is a mail protocol used for accessing email on a remote web server from a local client. IMAP and POP3 are the two most commonly used Internet mail protocols for retrieving emails. Both protocols are supported by all modern email clients and web servers.

While the POP3 protocol assumes that your email is being accessed only from one application, IMAP allows simultaneous access by multiple clients. This is why IMAP is more suitable for you if you’re going to access your email from different locations or if your messages are managed by multiple users.

By default, the IMAP protocol works on two ports:

Port 143: This is the default IMAP non-encrypted port;

Port 993: This is the port you need to use if you want to connect using IMAP securely.

POP3

Post Office Protocol version 3 (POP3) is a standard mail protocol used to receive emails from a remote server to a local email client. POP3 allows you to download email messages on your local computer and read them even when you are offline. Note, that when you use POP3 to connect to your email account, messages are downloaded locally and removed from the email server. This means that if you access your account from multiple locations, that may not be the best option for you. On the other hand, if you use POP3, your messages are stored on your local computer, which reduces the space your email account uses on your web server.

By default, the POP3 protocol works on two ports:

Port 110: This is the default POP3 non-encrypted port;

Port 995: This is the port you need to use if you want to connect using POP3 securely.

Value delivery is the manner in which you design your products such that it gives maximum value to the customer using it. The value delivered to customers can be in the form of products, benefits, attributes etc. Anything which creates value for your customer should be involved in your value delivery process.

If you were to ask your parents in India whether they had air conditioners 3 decades back in their childhood, the answer will probably be no. India had just become independent and it was still a developing albeit struggling nation.

Strategies:

1) Choosing which value is most important to customers

Today in the value delivery process, the customer is at the center of attention and the products and services are designed keeping the customer in mind. Thus, the value delivery process is correct from the start wherein the product itself is chosen based on its value to the customer. The products which are not valuable are phased out from the start.

2) Delivering the value

Forming a strong marketing strategy, placing the marketing mix, finding the target markets and other such tactics are ways by which delivering the value to the customer has become easier. Marketing as a career itself has evolved whereby many companies are closely watching the strategies being implemented by their marketing department. Thus, delivering the value has become easier.

3) Communicating the value

Once the value delivery process is designed, it is important that you communicate the value to the customer. Today there is a lot of noise and customers do not pay attention to a message unless it is repeated over and over. Thus forming a promotion mix and ensuring that the customer does not overlook the value being delivered is important.

Thus over a period of time, customers have evolved to form the base of the value delivery process. With the advancement of technology, we can be sure that the value of products will only increase instead of decreasing, the product development function will evolve even faster and give unthinkable innovations and developments from current age products. Thus, you need to look at your business and decide is your value delivery upto mark.

Upstream marketing

Upstream marketing refers to the strategic process of identifying and fulfilling customer needs. Upstream marketing takes place at a much earlier stage by developing a clear market segmentation map and then identifying and precisely defining which customer segments to focus on. It analyzes how the end-users uses the product or service and what competitive advantage will be required to win the customer and at what price point. It is done very early in the product or service development cycle, and is one of the missing links for generating revenue growth at many companies.

Strategies:

Analyze trends

Analyze trends provides great insight into the future needs of customers. Some trends to analyze include considering what products or services sell, looking at your competitors and identifying the growing popularity of certain items. Trends are statistical and factual which makes them reliable. Implement this information in your decision-making and refer to it later in the future to see how it impacted your business.

Focus on growth

Upstream marketing assumes the long-term success of your company. Focusing on growth considers what products or services could contribute to expansion. Upstream marketing thinks ahead and predicts future needs. Focusing on growth includes growing your customer base, your company and the number of products and services you offer. For example, you might want your company to offer an upgraded version of your product overseas, therefore reaching more customers.

Create a timeline

Creating a timeline helps you plan the timing of achieving certain goals. Timelines include specific dates that correlate with company goals and help create an attainable action plan. Timelines are an easy way to simplify steps while still maintaining daily structure. They map out the future in a visual manner that is easy to understand for everyone involved. A timeline is also motivating because the result is noted.

Survey your customers

Upstream marketing considers the future needs of the customer. The best way to know what these needs are is by speaking directly to the source. Surveying your customers gives you a better idea of what they need and allows them a chance to share their thoughts. Some ways to survey your customers include social media polling and in-person interviewing.

Think of innovative ideas

A primary characteristic of upstream marketing is innovation. Innovative thinking is brainstorming in a new and refreshing way. Consider products or services not yet made and customer needs not yet met. Innovative thinking creates effective solutions through a new perspective.

For example, a company produces a phone app that tends to a customer desire not yet addressed by other products. This could be a brand new app on the market or an updated version of an existing app. The characteristics of upstream marketing lie in the concept of creating this new idea as a long-term goal and the intention to help customers in the future.

Evaluate the market

Evaluating the market, what products it has and where it is going is crucial for upward marketing planning. To strategically design future products, services and solutions, you first study the market. Some aspects to consider include the urgency of products and what pricing looks like. Much of market evaluation assesses potential. For example, the potential of a product to succeed or the potential for a product to continue selling after a long period of time.

Value Innovation

Value innovation is a process in which a company introduces new technologies or upgrades that are designed to achieve both product differentiation and low costs.

The changes implemented through value innovation create new or improved elements for the product or service, but also result in cost savings by eliminating or reducing unnecessary aspects during the product lifecycle.

Value innovation does not necessarily create a completely new product or technology. This type of innovation can improve on existing services and lowers the costs of that service for both the company and their customers.

Blue oceans refer to all the unexplored or unknown markets. Red oceans, the existing markets, are filled with fierce competition that eliminates profit whereas the blue ones are untouched by competition and thus full of opportunity for profitable growth. So, the Blue Ocean Strategy simply refers to creating new demand by developing uncontested market space instead of competing in the crowded red ocean colored by the blood of everyone that swims in it.

Benefits:

Make the competition irrelevant

As mentioned, in a traditional setting, growth and performance are achieved when you manage to beat competition. When you focus on beating the competition you work on small improvements which are good, but not enough to give you a leading position for too long.

Even more, this approach means that you limit the time and resources you allocate to identifying new innovation opportunities. When you pursue value innovation you focus on adding higher value at lower costs, so you make the competition irrelevant.

Make the competition irrelevant

As mentioned, in a traditional setting, growth and performance are achieved when you manage to beat competition. When you focus on beating the competition you work on small improvements which are good, but not enough to give you a leading position for too long.

Even more, this approach means that you limit the time and resources you allocate to identifying new innovation opportunities. When you pursue value innovation you focus on adding higher value at lower costs, so you make the competition irrelevant.

Create an exponential mindset

Another noteworthy benefit of value innovation is the unconventional thinking that it comes with.

Successful companies focus on exponential value, not just on incremental improvements. While both have their role in the growth of a business, there is a big difference between the two.

Incremental thinking is about making something 10% better while the exponential thinking is about how to be 10x better by making something different. The 10% is a plane taking you from A to B, while the 10x is a rocket launching into space.

When companies compete for the same market share, their strategy is mostly built around incremental improvements that give a competitive advantage, until they are surpassed or outperformed again, and the process starts all over.

Co-creation of value

Co-creation of value is a business strategy, one that promotes and encourages active involvement from the customer to create on-demand and made-to-order products. With co-creation, consumers get exactly what they want and have a hand in making it happen. Like the NikeID platform, co-creation makes the design process fun through a user-friendly site with great product visuals. Co-creation, then, becomes as much about the process of the product as purchasing the product itself.

Co-creation, in the context of a business, refers to a product or service design process in which input from consumers plays a central role from beginning to end. Less specifically, the term is also used for any way in which a business allows consumers to submit ideas, designs or content. This way, the firm will not run out of ideas regarding the design to be created and at the same time, it will further strengthen the business relationship between the firm and its customers. Another meaning is the creation of value by ordinary people, whether for a company or not.

Retailers are using co-creation primarily in an e-commerce setting where it is easier to engage customers in a more interactive experience, but the model can also be seen in some brick-and-mortar stores, like Build-A-Bear Workshop. For businesses, there are reduced manufacturing and production inefficiencies and failures because products are built based on consumer demand, enhancing customer satisfaction.

Co-creation, in many ways, is a collaborative creation between a brand and its fans. It has evolved the sales and marketing of products from a one-to-many formula to a one-to-one formula, a more personalized approach. For marketing professionals, it has turned the communication from active brand/passive consumer to one where both sides are active and engaged.

Disadvantages

Though the potential for co-creating value through interaction is huge, the possibility of interactional value co-destruction should not be overlooked. Managers and academics alike must recognize that value co-creation is not the only possible outcome of interaction between service systems. Adverse consequences can occur for a variety of reasons. It is therefore essential, before implementing a strategy based on S-D logic, to consider where, how, and to what extent co-destruction might occur.

Exploitation of customers under the norms of ‘value co-creation’ takes place on two related but different planes. First, consumers are not generally paid for the know-how, enthusiasm, and social cooperation that they contribute to the manufacturing process of marketable commodities. Second, customers typically pay what the marketing profession calls a ‘price premium’ for the fruits of their own labor. They call it the use value provided by co-created commodities is said to be higher than that which can be accomplished through rationalized systems of standardized production. In other words, the work undertaken by customers to customize their own commodities, ends up increasing the price one has to pay for one’s creation.

Consumers have to also learn that co-creation is a two-way street. The risks cannot be one sided. They must take some responsibility for the risks they consciously accept. The tobacco company has the obligation to educate consumers on the risks of smoking and develop cessation programs. But if a consumer persists in smoking, he must take responsibility for his own actions. In cases where the consumer is unlikely to have the expertise to make that choice, they must accept the choice made for them by a neutral party such as the Federal Drug Administration.

Markets, industries, companies, systems, and people do not change so often: it may take quite some time before the whole world is co-creating. The concept challenges many of the habits of managers. To change the mind-sets of people within the company into the way that an external customer think is not an easy task.

Value in marketing, also known as customer-perceived value, is the difference between a prospective customer’s evaluation of the benefits and costs of one product when compared with others.

Value may also be expressed as a straightforward relationship between perceived benefits and perceived costs:

Value = Benefits – Cost

The basic underlying concept of value in marketing is human needs. The basic human needs may include food, shelter, belonging, love, and self-expression. Both culture and individual personality shape human needs in what is known as wants. When wants are backed by buying power, they become demands.

With a consumers’ wants and resources (financial ability), they demand products and services with benefits that add up to the most value and satisfaction.

The four types of value include: functional value, monetary value, social value, and psychological value. The sources of value are not equally important to all consumers. How important a value is, depends on the consumer and the purchase. Values should always be defined through the “eyes” of the consumer.

Functional Value: This type of value is what an offer does, it’s the solution an offer provides to the customer.

Monetary Value: This is where the function of the price paid is relative to an offering perceived worth. This value invites a trade-off between other values and monetary costs.

Social Value: The extent to which owning a product or engaging in a service allows the consumer to connect with others.

Psychological Value: The extent to which a product allows consumers to express themselves or feel better.

For a firm to deliver value to its customers, they must consider what is known as the “total market offering.” This includes the reputation of the organization, staff representation, product benefits, and technological characteristics as compared to competitors’ market offerings and prices. Value can thus be defined as the relationship of a firm’s market offerings to those of its competitors.

Value in marketing can be defined by both qualitative and quantitative measures. On the qualitative side, value is the perceived gain composed of individual’s emotional, mental and physical condition plus various social, economic, cultural and environmental factors. On the quantitative side, value is the actual gain measured in terms of financial numbers, percentages, and dollars.

For an organization to deliver value, it has to improve its value: Cost ratio. When an organization delivers high value at high price, the perceived value may be low. When it delivers high value at low price, the perceived value may be high. The key to deliver high perceived value is attaching value to each of the individuals or organizations making them believe that what you are offering is beyond expectation helping them to solve a problem, offering a solution, giving results, and making them happy.

Value changes based on time, place and people in relation to changing environmental factors. It is a creative energy exchange between people and organizations in our marketplace.

Very often managers conduct customer value analysis to reveal the company’s strengths and weaknesses compared to other competitors. The steps include:

• Identifying the major attributes and benefits that customers value for choosing a product and vendor.
• Assessment of the quantitative importance of the different attributes and benefits.
• Assessment of the company’s and competitors’ performance on each attribute and benefits.
• Examining how customer in the particular segment rated company against major competitor on each attribute.
• Monitoring customer perceived value over time.

Value Creation and Delivery

Value-creation and value-delivery is the main task of marketing. Marketing in its entirety is a value “Creating and value-delivering process. The whole bunch of tasks involved in marketing, serve the purpose of value delivery. They actually form a sequence leading to value delivery.

Marketing planning, buyer analysis, market segmentation and targeting are concerned with value selection. Product development, manufacturing, service planning, pricing, distribution and servicing, are concerned with value creation & value delivery. Personal selling, advertising, publicity and sales promotion are concerned with value communication. Activities like market research and market control assess the effectiveness of the value delivery process, the level of satisfaction the customer has actually received and how it compares with the firms intention as well as with other competing offers for the purpose of enhancing value.

In any marketing situation, one can discern four distinct steps in the value providing process:

• Value selection.
• Value creation/value delivery
• Value communication (making a value proposition and communicating it.)
• Value enhancement.

Value Selection

It is obvious that selecting the value to be offered is the first step in the value delivering process. Everything else follows. Only after selecting the value to be offered, can the firm proceed with production, sales and promotion. What needs to be specifically understood here is that the firm finds out what constitutes value in the estimation of the customer and accepts it as the value to be offered. Value selection is thus not only the first step in the sequence but also the most crucial one.

Value Creation / Value Delivery

This constitutes the bulk of the marketing job. What the firm has promised to provide the customer has to be actually provided. The product offering must actually carry the benefits the firm has promised and it must be reached to the customer in the most satisfying manner. Value creation/value delivery signifies the successful execution of the firms promise. Most firms fumble here because they promise to provide all sorts of things, but they fail deliver; their products fail to carry the value they were supposed to carry. The entire firm with all the functions and activities is involved in this step. In creating and delivering the product with all the associated benefits, which the firm has decided to offer, there is a role for technology, design and engineering finance management and the organizational set-up

On Marketing Concept, in this article we outlined up on the idea of integrated management action. What is required in value creation and delivery is integrated management action with marketing taking center stage.

Value Communication

After selecting the value to be offered and deciding how the value has to be created /delivered, the firm tries to communicate the value to the customer. In this step, there are actually two components. The firm works out a value proposition and then communicates it to the customer.

Making a Value Proposition

In a marketing endeavour, what the firm offers to the customer is not a mere physical product; it offers a value proposition. The product offer consisting of the best possible benefits/value is put forward as a value proposition, explaining how the offer matches the customers requirement s and how it works out to be the best among all the competing offers.

Communicating the Value Proposition

The firm then, communicates the value proposition to the customer. It explains the uniqueness of its offer through a well-formulated marketing communication mix. The customers exercise of assessing the value of the offer actually starts from this stage.

Value Enhancement

The firm also continuously and proactively enhances the value. It collects feedback from the consumer about his level of satisfaction with the product and upgrades the value. It actually is a non-stop job for the firm to search for the customers satisfaction level and augment the offer. Competing products, including substitute products, keep attacking the value proposition of the firm.

Expectations of customers to keep changing. The firm has to search for the new expectations of the customers, locate product gaps/ benefits gaps and keep making new and better offers to the customer to stay ahead of the competition in value rankings.

Sales promotion gimmicks do not normally serve the purpose of sustained value addition. Sales promotion measures like consumer deals and trade deals result in just a temporary shift in the value-cost equation in favor of the consumer. When the deals are withdrawn, consumers turn away from the product.

What is needed is a sustained and ongoing effort, not short-lived big bangs. The effort must be lasting value addition, which normally accrues only though factors like enhancement of the functional utility/ convenience of the product.

Business markets need to be segmented like consumer markets geographically or by benefits sought, user status, usage rate, and loyalty status. Some additional variables are also used for segmenting business markets.

These are Business Market Segmentation bases;

• Customer demographics (industry, company size),
• Operating characteristics,
• Purchasing approaches,
• Situational factors, and
• Personal characteristics.

Retention based:

Risk of customer cancellation of company service

One of the most common indicators of high-risk customers is a drop off in usage of the company’s service. For example, in the credit card industry, this could be signaled through a customer’s decline in spending on his or her card.

Risk of customer switching to a competitor

Many times customers move purchase preferences to a competitor brand. This may happen for many reasons those of which can be more difficult to measure. It is many times beneficial for the former company to gain meaningful insights, through data analysis, as to why this change of preference has occurred. Such insights can lead to effective strategies for winning back the customer or on how not to lose the target customer in the first place.

Customer retention worthiness

This determination boils down to whether the post-retention profit generated from the customer is predicted to be greater than the cost incurred to retain the customer and includes evaluation of customer lifecycles.

Different Buyer:

Relationship Buyers: These buyers regard Signode’s packaging products as moderately important and are knowledgeable about competitors’ offerings. They prefer to buy from Signode as long as its price is reasonably competitive. They receive a small discount and a modest amount of service. This segment is Signode’s second most profitable.

Programmed Buyers: The buyers view Signode’s products as not very important to their operations. They buy the products as a routine purchase, usually pay full price, and accept below-average service. This is a highly profitable segment for Signode.

Transaction Buyers: These buyers see Signode’s products as very important to their operations. They are price and service sensitive. They receive about a 10 percent discount and above ­average service. They are knowledgeable about competitors’ offerings and ready to switch for a better price, even if it means losing some service.

Bargain Hunters: These buyers see Signode’s products as very important and demand the deepest discount and the highest service. They know the alternative suppliers’ bargain hard and are ready to switch at the slightest dissatisfaction. Signode needs these buyers for volume purposes, but they are not very profitable.

4 levels of market segmentation are:

Mass Marketing or Undifferentiated Marketing

Mass marketing refers to the strategy of targeting the entire potential customer market by means of a single marketing message. The marketing strategy used in this segmentation does not target the specific requirements or needs of customers. Mass marketing strategy, instead of focusing on a subset of customers, focuses on the entire market segment that can be a probable customer of a product.

An example of mass marketing strategy is of Baygon cockroach spray or Mortein mosquito repellent coils that target all its potential customers through a single marketing message.

Advantages of Mass Marketing

• Only one marketing plan is required, and no specific market segment is targeted. One marketing campaign targets the whole market, facilitating marketing economies of scale.
• Economies of scale can be obtained in mass markets because of enormous size. Thus, the average cost of bringing the product to the market will be lower, and hence, profit margins higher.
• Providing products for a mass market enables establishing a more extensive base of customers. This will generally increase profitability.

Limitations of Mass Marketing

• In mass marketing, the competition is usually broad and extreme.
• There are very high barriers to entry for mass markets. Often incumbent competition has invested in capital equipment, large-scale factories, offshore centers, efficient supply chain management processes, etc. Huge competition can make it extremely difficult to compete in a mass-market as a new firm successfully.
• Mass marketing is less focussed, requires more resources.
• The company can suffer a high loss if the marketing strategy fails.

Product-Variety Marketing or Differentiated Marketing

In Product-Variety Marketing or Differentiated Marketing, the marketer divides the market into different segments depending on the consumer’s buying behavior, requirements, purchasing power, location, and age level.

In product-variety marketing, the seller produces two or more products that have different features, styles, quality, and so on. Subsequently, Kohinoor produced several kinds of toothpaste bearing different brands with other packages. They were designed to offer variety to consumers rather than creating various appeals to different market segments.

Differentiated marketing helps the marketer to connect to each type of customer in the best possible way. Most companies use different market segments for marketing its entire list of products which caters to different market levels.

The promotional and advertising activities for a particular focus only to the target market for that product.

The example of segment marketing within clothing industry may be men, women, casual, fashionable and business clothing segments.

Concentrated Marketing or Niche Marketing

This strategy of marketing focuses on a narrower customer segmentation. Customers may want or desire a product that is not met completely by the products offered in a market. When companies move forward and develop highly specialized products to offer these customers their specific needs, they offer distinct products in a market that caters to specific customer segments only.

Mountain bikes are an example of a niche marketing segment. where the market segmentation will be individuals interested in mountain biking only. Since not every bike manufacturing company caters to mountain bikers, it is a niche segment. Companies that produce mountain bikes target the niche segment of mountain bikers and cater to their specific needs, preferences and requirements.

Advantages of Niche Marketing

• When a specific market segment is targeted in a firm’s marketing, marketing tends to be more focused and likely to have a greater appeal within the targeted segment. Mass marketing is not as focussed and, as such, tends to focus on the ‘average’ consumer.
• Businesses can become highly specialized in finding out the needs and wants of a niche market they are targeting. With needs and wants being better met, customer loyalty can ensue.
• Competitive rivalry within a niche market is less than that for broader markets. Less competition can translate into increased pricing power for a firm’s differentiated products, which, in turn, can lead to increased profitability.

Limitations of Niche Marketing

• Niche markets, by their definition, are small. The number of total potential customers in the market is limited. Niche marketing strategies may miss potential customers and depress sales revenues.
• Economies of scale may not be obtained in niche markets due to their limited size. Thus, the average cost of bringing the product to the market will be higher, leading to higher prices and or lower profit margins.
• Profitable niche markets with low barriers to entry are likely to attract new competitors into the industry. Niche markets are small and cannot sustain a relatively high number of competitors.

Micro Marketing

Micro marketing follows an even narrower segmentation marketing strategy, catering to the attribute of a much-defined subset of potential customers such as catering to individuals of a specific geographical location or a very specific lifestyle.

An example of niche marketing is luxury cars that are very high priced and offer exceptional features such as high speed, customized look, etc. Since these cars are very expensive and limited in number, the niche market for these vehicles target rich, car lovers that are interested in the unique features and has the financial capability to buy them.

Types:

Local marketing

In Local marketing, the seller or the marketer only concentrates on the local market. The products also have the local appeal or the local usages, and the promotional activities are planned based o the location only with local flavor.

Here the cost remains high due to lower production, and competition is also less. Marketers can concentrate on mom in the local market to reach all the customers in the region. The best example would be the marketing of regional chain of hotels or restaurants, locally produced food products, etc.

Local marketing can be studied from both the retailer and manufacturer perspective. For the retailer, local marketing implies the optimization of the store’s marketing mix.

For the manufacturer, local marketing implies optimizing the product’s marketing mix at the store level. We focus on the interaction between manufacturers and retailers, how manufacturers and retailers optimize the marketing mix for a product (category) at the store level.

Individual Marketing

Individual marketing focuses on satisfying the needs and wants of individual customers it’s also known as one-to-one marketing and customized marketing; it’s the segmentation level where the seller offers a customized product to the consumer.

In simple words, making and selling product(s) according to the needs and preferences of the consumer.

For example, a Fabrics company will cut your cloths according to the needs of the individual customers.

Individual Marketing happens when several specific attributes are “fulfilled” will the personal message be automatically triggered by one person.

The more attributes included triggering the message, the more relevant it becomes for the person. Let’s look at the type of attributes.

• Customer profile attributes: A simple message commonly used is the birthday month promotion.
• New and renewal: Sending automatic messages triggered to the person based on the new, active, lapsing, or inactive customers (or members) group. The content will be relevant based on their activity level.
• Buying behavior: The spending history (the type of product, average spend, frequency, changing spending patterns) is used to trigger a message.
• Channel behavior: the channel interactions (web, mobile, e/m-commerce, social media, visits) is used to trigger a message.
• Customer sentiments: may include feedback forms, service cases, likes on social media.
• Location: These are often real-time messages being sent when a person is close to, outside, or inside a particular location.

Prices set by a company do not always remain the same. Over time, the original price established for almost any product will have to be adjusted. The marketing executive will find it necessary to change the product’s price several times during the course of its life cycle.

They are changed or adapted depending on the needs or situations. A company needs to adapt its prices to different situations, i.e., it may charge different prices depending on geographic variation, variations in segments, purchase timing, order levels, delivery frequency, guarantees, service contracts, and some other factors.

Goals:

Price adaptations are made to pursue a number of goals;

• Change of purchase patterns
• Market segmentation
• Market expansion
• Utilization of excess capacity
• Implementation of channel strategy
• To meet the competition.

Market Segmentation

Marketers can also adapt their prices to tap segments of a market, which differ in demand elasticity.

These differences in sensitivity to price may come about because of differing values in use among various classes of buyers and/or differing competitive situations facing the seller.

Market Expansion

The market for a given product or service may be expanded by offering lower prices to customers who have lower values in use.

Utilization of Excess Capacity

Price adaptations can also be made to utilize excess production or marketing capacity.

If such capacity exists, adaptation makes a sale possible, which covers direct costs and will contribute to the firm’s total profits.

Implementation of Channel Strategy

Price adaptation is a major device by which a firm attempts to implement its marketing strategy with regard to channels of distribution. Price variations may reflect differences in marketing tasks performed by various types of resellers or differences in the competitive environments in which they operate.

Different price-adaptation strategies to be discussed here are;

Geographical pricing

The basic issue confronting the executive here is recognizing that market conditions and consumer sensitivities to price vary by geographic area. The difference in price occurs not only on wide territorial bases but also between districts and even in different parts of the same district.

Though such an exercise is very costly, the executive could segment the overall market into tiny geographic areas and set unique prices in each.

Price discounts, allowances, and Promotional pricing;

The standard price established for the product by a marketer is list price. But it is not always the actual price charged to the customer.

Here, basic prices are modified to reward customers for such acts as early payments, volume purchases, and off-season buying and called together discounts and allowances.

Marketers sometimes offer a discount or allowance to the buyers, effectively reducing the product’s list price, making it more competitive in the marketplace, stimulating short-term demand, or creating product awareness.

In order to attain any of these objectives, a marketer can choose from a variety of discount and allowance methods. Some of the most commonly used strategies are:

• Quantity discounts.
• Cash discounts.
• Trade discounts.
• Seasonal discounts.
• Promotional allowances: Loss-leader pricing, special-event pricing, cash rebates, low-interest financing, longer payment terms, warranties and service contracts, psychological discounting.
• Forward dating.

Discriminatory pricing

• Customer-Segment Pricing.
• Product-Form Pricing.
• Image Pricing.
• Location Pricing.
• Time Pricing.

Product-mix pricing

The logic of setting or charging a price on an individual product has to be modified when the product is a member of a product mix.

Six situations may be distinguished involving product-mix pricing;

• Product-­line pricing,
• Optional-feature pricing,
• Captive-product pricing,
• Two-part pricing,
• Byproduct pricing, and
• Product-bundling pricing.

Companies are bound to face market situations where they are required to initiate price changes. It means, either they are to cut the prices or increase the present prices to survive, maintain status quo or further growth. Initiating price changes involves two possibilities of price cuts and price increases.

Initiating Price Cuts:

There are good many circumstances where a firm is to resort to price cuts.

There are genuine reasons for cutting prices:

First may be existence of excess capacity. In such situation the firm is badly in need of additional business and cannot generate it through increased sales efforts, product improvement or even price rise.

It may resort to aggressive pricing, but in initiating price out, the company may trigger a price war. Second reason for initiating price cut is a drive to dominate the market through lower costs.

Here, either the company starts with lower costs than its competitors or it initiates price cuts in the hope of gaining the market share and lower costs to price cutting policy involves the following possible traps:

1. Low-quality trap:

Consumers will assume that quality is low.

2. Fragile-market share trap:

A low price buys market share but not market loyalty. The same customers will shift to any lower- priced firm that comes along.

3. Shallow-pockets trap:

The higher priced competitors may cut their prices and may have longer staying power because of deeper cash resources.

Initiating Price Increases:

Price increase is a source of maximising the profit or maintaining it if done carefully. Say a company earns 3 percent profit on sales, and one percent price increase will increase profits by 33 per cent if sales volume is not affected.

The factors leading to price increase can be:

1. Increase in cost inflation. That is rising costs unmatched by productivity gains squeeze profit margins and lead companies to regular rounds of price increases. Companies often raise their by more than the cost hike, in anticipation of further inflation or government price controls, in a practice called anticipatory pricing.
2. Over demand can be another cause that leads to price increase. When the company cannot supply all of its customers, it can raise its prices, ration or cut supplies to customers or both.

The price can be increased by at least four ways:

1. Delayed quotation pricing:

Here, the company does not set final price until product is finished or delivered. This pricing is prevalent in industries with long production lead times like construction and heavy industrial equipment’s.

2. Unbundling:

The company under this plan maintains its price but removes or prices separately one or more elements that were part of the former offer, such as free delivery or installation.

Automobile companies, sometimes, add antilock brakes and passenger-side air-bags as supplementary extras to their whiles.

3. Escalator clauses:

Under this, the company asks the customer to pay today’s price and all or part of any inflation increase that takes place before delivery. This hike based on specified price index. These escalation clauses are quite common in construction line whether it is a house or industrial project or air-craft and ship building.

4. Reduction of discounts:

The company asks the sales force to offer its normal cash and quantity discounts at reduced rate. To gain four such attempts, the company must avoid looking like a price gouger. Companies also think of who will bear the brunt of the increased prices.

It is so because, customer memories are long, and they can turn against the company which is perceived as price gauger.

Reactions to Price Changes:

Naturally any price change provokes response or reaction from customers, competitors, distributors and suppliers and even the government. Here, we shall touch only the reactions of consumers and competitors.

Customer Reactions:

Consumers are more interested in knowing the cause or causes of price change.

A price cut can be interpreted in several ways:

1. The item or product is about to be replaced by a new model.
2. The item is faulty and it is not selling well.
3. The firm’s financial position is badly affected.
4. The price will come down further.
5. The quality has been reduced.

A price hike may have some positive meanings:

1. The items is ‘hot’
2. It has a high value because of quality.

Competitor Reactions:

Competitors are most likely to react when the number of firms is few, the product is homogeneous, and buyers are highly informed. Competitor reactions can be a special problem when they have a strong value proposition. The price hike them to take steps based on objectives of such price hike where they will resort to advertising and product improving efforts.

In case of price cuts, they have different interpretations:

1. That the company’s trying to steal the market
2. That the company is doing poorly and trying to boost its sales
3. That company wants the whole industry to reduce prices to stimulate total demand.