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 

profits. 

• 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
changes.
Buyers often enjoy many online cost savings:

• The Net is convenient:
• It is open 24/7 = users can research, shop, consume entertainment
anytime.
• 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
immediately. 

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
loyalty.

• 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
 Bartering
 
 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.

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 http://nidhisinha1995.blogspot.in/2014/07/pre-shelling-parameters-and-conditions.htmland 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.

foundation and marketing issues

This paper identifies the technological and commercial foundations of the new category of online applications commonly described as Web 2.0 or Social Media. It examines the relevance of Web 2.0 for Marketing Strategy and for Direct Marketing in particular. The issue is not a clear-cut one: while several observers saw in Web 2.0 a new stage in the evolution of the internet, others simply rejected it as a new High-Tech hype while there is still no generally accepted definition and demarcation of the term. Paradoxically, even without an accepted definition and despite lack of extensive research, the corporate world seems to embrace the Web 2.0 concept: high-profile mergers and acquisitions have already taken place or are under way while corporations are rushing to integrate various forms of social media into their marketing planning. The experience so far, based to a large degree on anecdotal evidence, is that Web 2.0 has a substantial effect on consumer behaviour and has contributed to an unprecedented customer empowerment. The consequences are far reaching, affecting not only the area of technology development but also the domains of business strategy and marketing. From the academic but also the practical point of view, attention must be placed on the demarcation and evaluation of the new technologies and trends so that the real value of Web 2.0 as a component of the modern marketing can be determined.

Keywords: 

Web 2.0, social media, internet marketing, online marketing, online consumer behaviour, direct marketing, marketing strategy

Topof page

• Introduction

On the 2nd of April 2005, The Economist published an article titled ‘Crowned at last’ and TIME magazine, breaking a tradition of almost 40 years, assigned the title of the 2006 Man of the Year not to any particular personality but to the modern virtual consumer. The underlying theme of both publications — and many others that followed — was the effect of the new kind of internet applications on shaping a new class of consumers increasingly integrating the web into their daily life. Both articles describe how the phenomenon commonly referred to as Web 2.0 or Social Media is affecting the way people communicate, make decisions, socialise, learn, entertain themselves, interact with each other or even do their shopping. They also suggest that the Web 2.0, next to transforming peoples’ individual and group behaviour, has also affected the power structures in the marketplace, causing a substantial migration of market power from producers or vendors towards customers. The main reason for this is that today's online consumer has access to a previously unknown reservoir of information and knowledge as well as unlimited choice, available at the click of the computer mouse.

The terms Social Media and Web 2.0 are often used as interchangeable; however, some observers associate the term Web 2.0 mainly with online applications and the term Social Media with the social aspects of Web 2.0 applications (participation, openness, conversation, community, connectedness; SpannerWorks, 2007). In this paper, we will use the term Web 2.0 as an umbrella term of web applications fulfilling a number of criteria to be defined further on.

Web 2.0

The growing importance of the Web 2.0 and the effects on consumers and organisations are issues frequently making headlines and increasingly attracting academic attention. The interest is often focused on the ways in which these applications contribute to customer behavioural change and on new challenges facing strategists and marketers (Urban, 2003; McKinsey Quarterly, 2007). There is little clarity as to the exact nature of Web 2.0; for all intents and purposes, there is still no generally accepted definition of the term and no systematic research on its importance and its effects on the marketing practice. This paper will attempt to define this phenomenon and identify its dimensions in an effort to help marketers understand the potential of Web 2.0 as a (direct) marketing tool.

management of marketing

What is new in Hollensen: Marketing Management – A RelationshipApproach, 2^nd ed., published in April 2010?

• Full colour version
• Completely new design: Margin explanations of key concept
• The relationship approach is further discussed in Chapter 6, in form of the firm’s relationships and cooperation with customers, suppliers, complementors / partners and competitors (also called the value net)
• New hot and updated issues are covered: Long Tail, Cause Marketing, Customer driven innovation, New comprehensive chapter on CSR,  Good Enough Market (GEM) Strategy (especially relevant for China), Bottom of Pyramid (BOP) Marketing, Blue Ocean Strategy, Marketing in Emerging markets, e.g. Iran, Social Marketing (a cool case on YouthAIDS), Lean Business modeling (e.g. a cool case about Björn Borg AB), Time-based Marketing Strategy, Online marketing surveys
• New comprehensive Chapter 9 on Corporate Social Responsibility (CSR), including the Sustainable Global Value Chain (SGVC), Cause Marketing, and marketing to the Bottom of Pyramid (BOP),
• Completely new cases:  16 very comprehensive Chapter cases + 5 Video Part cases – The Author had personal contact and a dialogue with most of the companies – see below
• More e-marketing aspects are integrated throughout the book

CASES:

All existing cases are now up-to-date

21completely new cases are available:

Part Video cases (5 new cases): Tata Nano (Part 1), Orascom Telecom (Part 2), Nivea (Part 3), Indian Tourist Board (Part 4), Pret A Manger (Part 5)

Chapter cases (16 new cases): Duchy originals (case 1.1), Senseo (case 2.1), Nintendo Wii (case 3.1), Baxi Boilers (case 4.1), Cereal Partners Worldwide (CPW) (case 5.1), Saipa (case 6.1), Red Bull (case 7.1), Ryan Air (case 8.1), YouthAids (case 9.1), Dassault Falcon (case 10.1), Fisherman’s Friend (case 11.1), Harley-Davidson (case 12.1), Lindt & Sprüngli (case 13.1), TAG Heuer (case 14.1), Triumph underwear (case 15.1), Jordan toothbrush (case 16.1).