Monday, 11 August 2014

Geographic Segment Pricing of online marketing

• The seller recognizes that not all customers provide equal value to the firm.
• Pareto Principle states that 80% of a firm’s business usually comes from the 
top 20% of customers. 
• A+ customers: 
• A small group that contribute disproportionately to the firm’s revenues and 
• The most loyal customers who may become brand advocates to their 
friends and acquaintances = The frequent flyers. 
• They are also brand-loyal frequent customers who provide significant value 
to the seller. 
 When A+ or A customers appear at the Web site, they will be recognized 
and receive special attention. 
 They may not be price sensitive = they perceive that the brand/firm offers 
greater benefits + has earned their loyalty. 

Internal Factors of online marketing

1. Profit-oriented objective (most common strategy) :
• Focuses on current profit maximization rather than long-term performance,
• First estimate what demand and costs will be at different prices,
• Then choose the price that will produce the maximum current profit, cash flow, ROI.

2. Market-oriented objective:
1. Building a larger customer base = lower costs & higher long-run profit,
 Low prices generally build market share.
 AOL broadband Internet connection services is low to increase market share.
2. Product-quality leadership = high price to cover higher performance quality and high
cost of R&D.
3. Negotiation and bidding.

3. Competition-based pricing objective:
• Price according to what competitors charge for similar products, paying less
attention to the company's own costs or to demand.
 When one airline drops prices, its competitors usually follow suit.
 The Internet gives firms quicker access to competitive price changes. 

Seller View in online marketing

• Price = the amount of money they receive from buyers.

• Pricing floor = seller costs for producing the good or service,
 Under, no profit is made,
 Above, marketers set a price to draw buyers from competing offers,
 Price - Cost = Profit

• Factors affecting pricing levels:
• Internal factors = the firm’s strengths and weaknesses from:
• Its SWOT analysis,
• Its overall pricing objectives,
• Its marketing mix strategy,
• The costs involved in producing and marketing the product.
• External factors = the market structure & the buyer’s perspective. 

Buyer Control in online marketing

• Buyer power online is based largely on the huge quantity of
information & product availability on the Web.
Online buyers are becoming more sophisticated.

• Sellers are more willing to negotiate = giving power to
buyers in the exchange.

• Sellers realize that information technology can help them
better manage inventories & automate frequent price
Buyers often enjoy many online cost savings:

• The Net is convenient:
• It is open 24/7 = users can research, shop, consume entertainment
• E-mail allows asynchronous communication among users at any location
and prevents “telephone tag” with sellers.

• The Net is fast:
• Users can order a product and receive it the following day.

• Self-service saves time:
• Customers can track shipments, pay bills, trade securities, check account
balances, and handle many other activities without waiting for sales reps.
• Users can request product information at Web sites and receive it

Segment Pricing

• B customers are price sensitive + use the product category more than
do C customers.

• C customers: large group + may be price shoppers or infrequent users
of the product category, not accounting for much of the seller’s revenue.

• The seller’s goal is to keep A customers brand loyal and to move all
groups up to a higher level of value.
 Pricing strategies can help.
 Giving high-value customers the first shot at discounts will reinforce their

• B and C customers: might enjoy e-mail blasts with fixed prices so they
can be informed of the firm’s price +The seller can use this technique
to build a database for moving customers up in value. 

Pricing Strategies of online marketing

Fixed Pricing
 Dynamic Pricing
 Price setting is full of contradictions:

• Short term: If the price is too low profits will suffer/ if it is too high sales decline.
• In the long run: an initial low price that builds market share can create economies of
scale to lower costs + increase profits.

• Information technology has complicated pricing:

• Sellers can easily change prices according to each buyer’s previous behavior.
• BUT it is a steep learning curve.
• Pricing objectives produce very different results = a low price will build market share
at the expense of maximizing profit.
• Buyer value perceptions vary between rational and emotional, and not everyone
reacts the same way.
• Firms using multichannel delivery systems must consider the varying costs of each
channel and buyers’ differing value perceptions about purchasing on the Internet
versus the brick and mortar store.
• Pricing is a tricky business, guided by data, experience, and experimentation.

Monday, 28 July 2014

effect of social media marketing on brand loyalty

Building and maintaining brand loyalty are one of the central themes of research for marketers for a very long time. Marketers have utilized various means to maintain the brand loyalty of their customers. One of the recent means is the social media marketing. The aim of this study is to identify the effect of social media marketing on brand loyalty of the consumers, given that the concept is receiving increasing attention from marketing academia practitioners. The scope of the study consists of customers who follow at least one brand on the social media in Turkey and the data were collected through the administration of a structured questionnaire with a sample of 338 people and tested via stepwise multiple regression analysis. The results of the study showed that brand loyalty of the customers is positively affected when the brand (1) offers advantageous campaigns, (2) offers relevant content, (3) offers popular contents, (4) appears on various platforms and offers applications on social media; were used by using SPSS 17.0 version. Customers prefer to share music tec,hnological-related, and funny contents on social media platforms. Based on our results, this study can be considered as a pioneer in this new area of marketing, and propose several tactics for the practitioners.