Economic Development since 1945 - Assignment Example

of the of the December 30, 2007 Business Economics Question Economic Development since 1945 Market Segmentation plays a key role in the marketing strategy of all successful organizations and is powerful marketing tool for several reasons. Most importantly, nearly all markets include groups of people or organizations with different product needs and preferences. Market segmentation helps marketers define customer needs and wants more precisely. Because market segments differ in size and potential, segmentation helps decision makers more accurately define marketing objectives and better allocate resources. Consumer goods marketers commonly use one or more of the following characteristics to segment markets: geography, demographics, psychographics, benefits sought and usage rate. Market segmentation is a two step process of naming broad product markets and segmenting these broad product markets in order to select target markets and develop suitable marketing mixes. For example, before 1960, the Coca-Cola Company produced only one beverage and aimed it at the entire soft drink market. Today Coca-Cola offers over a dozen different products to market segments based on diverse consumer preferences for flavors and calorie and caffeine content (Michael & Ash, 2004). It is now possible (especially in urban areas) to do all of one's shopping through an Internet connection. Groceries can be ordered online and delivered to keyed freezers in the driveway. Pizza can be ordered online and delivered within 30 minutes. Clothes, shoes, music, books, condoms, shampoo, jewelry, and even cars can be ordered online and delivered to your home. Tse and Yim (2001) conducted a study in HongKong interviewing book buyers regarding their choice to purchase a book online or at the store. SanFrancisco holds the lead for Internet purchases, with 22.3% of survey respondents indicating they had purchased online in the last 30 days (Fetto, 2002). Although this may not seem like a huge number, consider that most online purchases are made by people who have at least some expendable income. Consumers with expendable income are the ones most carefully targeted by marketing and advertising agencies. Consumers use the Internet not only to make purchases but to comparison shop, gather information about the product from a variety of sources, read the opinions or reviews of the product posted by other consumers, and so on. McKinney (2004) has proposed that there are five Internet consumer segments: confident/convenience oriented/ comparison, store preferred, highly involved, apathetic, and apprehensive. These segments represent five basic attitudes that consumers have toward Internet shopping. Interestingly, most of the respondents in the study were in the first segment (3 C's); they were confident in using the Internet, felt it was convenient, and provided a good way to comparison shop. The smallest consumer segment was the store preferred segment-individuals who preferred traditional mortar-and-bricks shopping to online shopping. However, even this segment did report shopping online occasionally. Thus, the Internet is pervasive in consumer culture, and this is likely to increase over time. The advent of wireless networking may mean that eventually someone standing in a store could use the Internet to comparison shop the same item they are seeing on the store shelf. When considering the impact of the Internet on consumer behavior, it is important to consider the new "world brand" or global community implications of Internet advertising and buying. Though not everyone has an outlet for a particular store in their vicinity, if they have Internet access they can still buy the product. This presents special issues. Colors have different meanings across various cultures. Global mass marketing has moved beyond Coca-Cola, which sells essentially the same product worldwide. However, other corporations market globally in much the way that Nabisco markets Oreos. The increase in the number of online consumers is likely to expand worldwide and make global brand presence almost instantaneous. The strategy decision areas of Product include - 1. Physical good - With the products of Innocent, the physical goodness is maintained as they are fresh concentrates and juices packed in eco bottles made of 100% renewable source - corn. 2. Benefits - The benefits of Innocent's products include that they are farm fresh and contain no concentrates. Even the packaging material is compostable made using corn. 3. Quality level - All business emissions of Innocent are offset by 120% to become carbon negative. The electricity for the plant is derived from green sources. The vans used by the Company run on bio-diesel. The Company insists that its suppliers should have signed up to the minimum standards of ILO (International Labor Organization). 4. Branding - Innocent's aim is to make natural products that are good for people. The company is concerned with the impact their business could have on the environment and climate. So they use only renewable energy for all their activities and have a good control on the carbon emissions which come out of their business. 5. Packaging - Innocent uses eco-friendly packing. The packaging bottles are made from 50% post consumer recycled (PCR) plastic. Innocent is currently testing a 75% PCR plastic bottle for packaging. Innocent is the first company to launch bottles made of biodegradable plastic. Question 2: Strengths and Weaknesses of Contracts A contract is a valid or legal agreement. In other words, a contract is an agreement made between two or more parties whereby legal rights and obligations are created which the law will enforce. Once available goods that meet the needs are identified, the person who needs them will contact those who may have them available for sale. In some cases those who sell goods extend offers to sell their goods to anyone who is interested in buying them, i.e. equipment, machinery etc. In other cases interested sellers and interested buyers might meet in an open bidding market to set acceptable prices for the sale and purchase of goods. Open market arrangements require some understanding of how the market operates and any particularly important terms, conditions or peculiar requirements applicable there (Saravanakumar & Sumathi, 2001). Bidding on goods only makes sense if the buyer who is bidding is certain that the goods satisfy her needs. This requires the buyer to investigate the goods before making any decision to bid on the goods. Negotiation strength is something that gives a party an opportunity to use the strength to benefit her interests. This decision may also consider the impact that using the strength has on the other party to the contract. A negotiation weakness recognizes absence of strength. It identifies that one party has an advantage over the other party. The comparison of relative strength and weakness may also conclude that neither side has an advantage over the other nor each side is in about the same situation as the other. Assuming that each party has fully performed her obligations, the contract will be fully performed and the transaction completed. Some aspects of the agreement, however, such as warranties or guarantees, may survive into the future. Question 3: Make or Buy Decision Price decisions affect both the number of sales a firm makes and how much money it earns. Price is what a customer must give up to get the benefits offered by the rest of a firm's marketing mix, so it plays a direct role in shaping customer value. The mental accounting framework (Thaler, 1985) proposes that the total utility from purchasing a product consists of two components: acquisition utility and transaction utility. The former corresponds to the monetary value of the deal, determined by the discrepancy between price and the value of the product to the consumer. Guided by the company's objectives, marketing managers must develop a set of pricing objectives and policies. They spell out what price situations the firm will face and how it will happen. These policies should explain a) how flexible prices will be, b) at what level they will be set over the product life cycle, and c) to whom and when discounts and allowances will be given. "Recent research trends in dynamic pricing and revenue management investigate the issue of strategic buyer behavior, whereby consumers optimally time their purchase in anticipation of future prices". (Ovchinnikov et al, 2005). Certain important facts about pricing strategy include - 1. Flexibility in the pricing strategy 2. Level over product life cycle - Any product in the Product life cycle may go through 4 different stages - Market introduction, Market growth, Market maturity and Sales decline. 3. Discount schemes offered for the product In a production industry, production and consumption happen at different times. The main ingredients of distribution channels are - 1. Improving Service delivery - Choosing the right distribution channel can increase the times that services are available or add to customer convenience. 2. Managing Service capacity - For product manufacturers, inventory acts as a buffer, enabling them to provide the product during periods of peak demand without extraordinary efforts. Promotion is communicating between seller and potential buyer or others in the channel to influence attitudes and behavior. The marketing manager's main promotion job is to tell target customers that the right product is available at the right place at the right price. The companies opt from several promotional methods - personal selling, advertising and publicity. Each promotion method has its own strengths and weaknesses. In combination, they complement each other. As a result, it is the responsibility of the sales managers, advertising managers and promotion managers to develop and implement the detailed plans for the various parts of the overall promotion blend (Kahn, 1988). In a monopolistic market the demand curve faced by the monopolist has a negative slope and is the same as the market demand curve for the product. Question 4: Monopoly A market structure is considered to be monopoly if three conditions are satisfied. The first condition is that there is only one seller of the product (Cathy, 2000). The monopolist has also complete control over the supply of the product which implies that the supply curve of the firm and the industry will be one and the same. The second condition is that there is no substitute for the monopolist's product which means that there is complete absence of competition under monopoly. The third condition is that the entry of the new firms to the industry should be completely blocked. There can be a number of obstacles and obstructions on the entry of new firms into the industry like restriction on entry arising out of the copyright and patents lying with the monopolist, the capacity of the monopolist to crush the budding firms, non-availability to other firms of the technically developed plant and empirical knowledge about the factors operating in the industry etc (Black, 2005). Whenever all these three conditions are found together in a market, it is a monopoly market structure. The monopolistic market structure is sometimes destroyed by the entry of new firms into the industry. Therefore, the monopolist firm quite often adopts various methods to stall the entry of new firms. The moment other firms are able to force their entry into the industry, the situation changes radically and the erstwhile monopolist firm loses its monopoly power leading to a change in the market form (Vinikas, 2006). The monopolistic competition is a market form in which many sellers of a product exist. Though the products of these sellers are similar in many respects, yet the consumers do not consider them completely identical. This implies that in the case of monopolistic competition the sellers do not sell completely substitutable goods but indulge in product differentiation. As a result, different groups of consumers are attracted towards goods produced by different sellers. This gives rise to an element of monopoly in the market enabling the sellers to earn extra profits (Nadal et al, 2003). References Black, Paula. 2005. The Beauty Industry: Gender, Culture, Pleasure, Routledge, 1st edition, p. 200. Cathy. M.C.2000. Exploring the Market trends in Cosmetics, Penguin Publishers, pp.224-230. Fetto, J. 2002. Online shopping spree. American Demographics, 24, 14. Kahn, Alfred. 1988. The Economics of Regulation: Principles and Institutions. Cambridge, MA: MIT Press, Reissue Edition, vol. II, Chapter 4. McKinney, L. N. 2004. Internet shopping orientation segments: An exploration of differences in consumer behavior. Family and Consumer Sciences Research Journal, 32, 408-433. Michael & Ash, Irene. 2004. Specialty Chemicals Source Book, 3rd Edition, C.H.I.P.S, pp.24-26. Nadal et al. 2003. "Monopoly Market with Externality: an Analysis with Statistical Physics and ACE. Ovchinnikov, A., J. Milner. 2005. Strategic response to consumer wait-or-buy: Revenue management through last-minute deals in the presence of consumer learning. Working paper, University of Toronto. Pitman. 2007. Organic food companies get in on cosmetics act. Montpellier, pp.4-5. Saravanavel, P & Sumathi, S. 2001. Legal Systems in Business. Himalaya Publishing House, New Delhi, pp.93-102. Thaler, Richard H. 1985. Mental accounting and consumer choice. Marketing Science 4(3) 199:214. Tse, A.C.B., & Yim, F. 2001. Factors affecting the choice of channels: Online vs. Conventional. Journal of International Consumer Marketing, 14, 137-152. Vinikas. 2006. Dying to Be Beautiful: The Fight for Safe Cosmetics, Soc Hist Med; 19: 352-353. Read More