Tuesday, November 25, 2008

Blue Ocean Strategy

Blue ocean strategy focuses on how to link innovation to commercial value. While traditional strategy, or red ocean strategy, exploits existing demand, blue ocean strategy creates and captures new demand. In a red ocean, competing companies usually have to choose between differentiating themselves at the expense of pushing up costs, or stay low-cost and undifferentiated from rivals. Rather than beating the competition, a blue ocean strategy works by making the competition irrelevant. There is a four-action framework for applying blue ocean strategy: eliminate, reduce, create and raise. That is, evaluate which factors the industry takes for granted but which can be eliminated, which factors can be reduced to below industry standards, which new factors should be created, and which should be raised above industry standards. In a blue ocean, companies realize both differentiation and low cost. In other words, returns from investments in blue oceans are substantially higher. Yet 86% of business launches by companies fall in the red ocean category. According to a study the revenue impact of these red ocean launches was 62% and profit impact 39%. The remaining 14% of business launches that fell in the blue ocean category accounted for 38% of revenues and had a profit impact of 61%. Research into blue ocean strategies in the 120-year-period from 1880-2000 demonstrates blue oceans are not about technology innovation. For instance, although the hugely successful iPod uses sophisticated technology, people buy it because it is so stylish and simple.

A good example of applying blue ocean strategy was seen when Ninentendo employed it for its Wii games. Wii's launch helped Nintendo grow sales 90% and profits, 77%. Its better established rival, Sony, was losing $ 240 on each Playstation 3 model sold, while Nintendo was making $ 40 on each Wii sold, With the Wii, what Ninentdo did was ask itself how many customers used high-definition TV compatibility, a feature that was pushing up the cost of the console. The answer was hardly any. So it decided to do away with this feature, keep the price of the Wii low and also target non-core gamers with the product. Thus using a blue ocean strategy, it created a new market for itself instead of fighting for share in the market space dominated by Sony's Playstation and Microsoft Xbox. It focuses on opening up new and uncontested market space and thereby reconstructing buyer value elements that resides across the industry boundaries.

Contributed By: Ritesh Baranwal

Saturday, November 22, 2008

Interactive Marketing

All types of marketing share a common goal which highlights the features of a product or service. Interactive marketing is one such effort on the part of marketers.

Interactive Marketing refers to the evolving trend in marketing whereby marketing has moved from a transaction-based effort to a conversation. John Deighton says interactive marketing is the ability to address the customer, remember what the customer says and address the customers in a way that illustrates and remember what the customer has told us. People are emotional, intuitive beings; they would not believe what you as a marketer wants to say, but they would definitely listen to what other people want to say about your product and services. This is what is targeted in the interactive marketing.

In interactive marketing, first the marketer should Engage the consumers. This can be done through online communities or websites, through TV contests and other medium. The next step is Retaining the trust and relationship with the customer. This can be only done by ethical practices and good customer service and relationship. Then Learning is the next step in line. The preference, choice or behaviour of the consumer should be recorded and database should be maintained for the same. This helps understanding the consumer behaviour and in designing the future marketing strategies. The last step is Relate i.e. relate to the consumers needs and requirements, customization and personalized service are used in order to relate to the consumers.

Though internet technology is one of the major communication mode used by marketers for interacting with the customers, interactive marketing can be done using other communication channels like telecommunication or mobile technology, Television, Radio, print media can also be used. Reality shows on leading TV channels in India thrive on interactive responses from viewers through SMS messages. These either enable participation on the shows or decide the winners on the reality programs telecast. Kaun Banega Crorepati 2, the second edition of the Indian equivalent of "Who Wants to be a Millionaire", elicited 1.6 million phone calls/SMSes for the first three episodes telecast on Rupert Murdoch owned Star TV in August 2005. In early 2006, viewers cast as many as 55 million votes through SMS/telephone/internet to decide the winner of a singing contest "Sa Re Ga Ma Pa Challenge 2005" on a TV channel.

Amazon.com is an excellent example of the use of interactive marketing, as customers record their preferences and are shown book selections that match not only their preferences but recent purchases. Kelloggs cornflakes SMS-based contest, to promote Iron Shakti ingredient in its cornflakes is another such example. Coca-cola’s interactive SMS promotion to promote Vanilla Coke is again an example of interactive marketing. As is evident from the various examples, across different product categories marketers are treading the interactive path to consumers' hearts and minds. To elicit proper responses to the contests, marketers dole out attractive prizes, such as mobile phones, T-shirts, CDs, vouchers redeemable at department stores, audio systems, TVs, etc.

The future of interactive marketing is very bright in India. The growth in internet penetration and broadband and scope for greater involvement of customers in such programs can only expand the scope for interactive marketing in India. The impressive growth rates clocked over the past year are likely to slow down, as the base increases. However, a promising future on the anvil for interactive marketers in India is not in doubt whatsoever, as estimates predict that by 2010, India is slated to have the third largest mobile and internet user base worldwide.

Contributed by: Ashwini Mavuri

Saturday, November 15, 2008

Brand v/s Product

Some days back, in the marketing class, I found myself listening to as well as speaking the words "brand" and "product" far too often. However, what I realized was that we are not too clear when to use these words. This prompted me refer to a lot of material on this subject. Following is a summary of all the ideas I could gather:

A brand is a collection of images and ideas representing an economic producer; more specifically, it refers to the descriptive verbal attributes and concrete symbols such as a name, logo, slogan, and design scheme that convey the essence of a company, product or service. A product is anything that can be offered to a market that might satisfy a want or need.To highlight the difference, I would like to put forth a recent example: The Shahrukh Khan commercial featuring Dish TV concentrated on portraying its features viz. pause live shows, get the language of your choice, movies that you like and so on. Here, there is no real creativity involved. The ad is plain vanilla informative marketing. However, the more recent commercial of "Tata Sky Plus" featuring Aamir Khan and Gul Panag concentrates more on talking to customer based on the experience from the perspective of a regular young couple which almost any middle class consumer can identify with. Thus, apart from providing information about the product to its target customers, the commercial is also successful in creating a long-lasting imprint in the viewers' minds - thus creating a better recall for its brand.

This example highlights one very important factor. The product in both the cases is DTH technology service. Although there are hardly any differences in terms of the products qualities and features, there is a marked difference in the way the target customers perceive the product. This is clearly due to the way the brands have been positioned. So, on a broad level, a product is something made at a factory. On the other hand, a brand is something which is bought by the customer. Typically, a product can be copied by a competitor whereas a brand is unique - it’s either there or not there. A product may be outdated very quickly whereas a successful brand may be timeless. A product may change from time-to-time depending on its life cycle stage; a brand typically remains consistent over a long period of time. A product is a more producer/seller centric approach; a brand is a customer centric approach. Thus, a marketer yearns to convert his products into brands which can then be leveraged to get higher returns for his products. A brand involves a loyalty factor, thus making it very enticing for marketers to convert their long running products into brands. As a side note, one also needs to keep in mind that a strong brand can be built only for a strong product which performs according to the expectations consistently.

Contributed by: Deep Agrawal

Tuesday, November 4, 2008

Geo Marketing

As a general term, Geomarketing is the integration of Geographical intelligence into all marketing aspects including sales and distribution. Geomarketing Research is the use of geographic parameters in research methodology starting from sampling, data collection, analysis, and presentation. Geomarketing Services are more related to routing, territorial planning, and site selection whereas the location is the key factor for such disciplins. The core base of Geomarketing is the digital map; it can either make or break the concept.
In marketing, geo (also called marketing geography) is a discipline within marketing analysis which uses geolocation (geographic information) in the process of planning and implementation of marketing activities. It can be used in any aspect of the marketing mix - the Product, Price, Promotion, or Place (geo targeting). Market segments can also correlate with location, and this can be useful in targeted marketing. The methodology geomarketing is successfully applied in the financial sector through identifying ATMs traffic generators and creating hotspots maps based on geographical parameters integrated with customer behavior.
GPS tracking and GSM localization can be used to obtain the actual position of the travelling customer.
Geolocation software is used to display data that can be linked to a geographic region or area. It can be used to:
Determine where the customers are (on country, city, street or user level).
Determine who the customer is (on organisation or user level), or make a guess on it based on earlier encounters by tracking IP address, credit card information, VOIP address, etc.
Visualize any data in a geographic context by linking it to a digital map.
Locate a web client's computer on a digital map. Calculate summary information for specific areas. Select customers within specific areas. Select customers with a certain radius of a point.
Using micro-geographic segmentation select customers similar to a specific type in the rest of the country.
A typical example for different web content by choice in geo marketing and geo targeting is the FedEx website at FedEx.com where users have the choice to select their country location first and are then presented with different site or article content depending on their selection.
Automated different content
With automated different content in internet marketing and geomarketing the delivery of different content based on the geographical geolocation and other personal information is automated.
Solve problems regarding location of a new retail outlet. Map consumer demand trends to best distribute products and advertising. Scope digital advertising towards individual consumers.
Research consumer shopping patterns and observe traffic within shopping centers and between retail outlets. Improve customer cooperation.

Contributed by: Bharat Jain

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