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May 20, 2010

Marketing Principles

Network marketing: A method of distribution in which independent-agents serve as distributors of goods and services, and are encouraged to build and manage their own sales force by recruiting and training other independent agents. In this system the buyer becomes a seller. Commission is earned on the agent's own sales revenue, as well as on the sales revenue of the sales-force recruited by the agent and his or her recruits (called downline). Also called multilevel marketing (MLM), cellular marketing, chain marketing, pyramid marketing or by other such names. It is a method employed by large firms such Amway, Tupperware etc.

Party selling: Type of direct selling in which sellers operate from the homes of customers on a rotation basis. Generally customers are suspicious and hostile towards new people or sales men. The perception is that sales people are out to dupe or make a sale forcefully. This perception is counteracted by party selling. In party selling the seller is your friend and a confidant. She/he is well known to the customer. The process is described. Kitty parties or card parties are very popular method of socialization for the home makers. They follow a system called pot luck (where each participant gets one eatable item. This reduces the time and cost pressure on the host). The kitty party has a session of card playing followed by games like housie and others. Then the participants settle down for a nice lunch.

Right after the lunch when everyone is relaxed the party selling starts. This is the time when the natural guard or resistance of the participants is at its lowest and they tend to buy from a source that is reliable and dependable. The participating customers earn a commission on the sales revenue realized. Also called party plan.

Home shopping: Purchases made from the buyer's home, via mail, telephone, door-to-door sales, fax, computer, or interactive television. In-home shopping has become popular grown since the arrival of interactive television, infomercials, and cable network shopping channels. Product information is delivered to consumers at home via direct-mail promotions, catalogs, print advertisements, broadcast media, and outbound telephone. The primary motivator for in-home shopping is convenience however; entertainment and impulse are also motivators. Bored viewers lap up products on offer especially if they are offered at an apparent discount.

Subliminal advertising: flashes of words and images or text onto a screen faster than the conscious mind can read or decode them or, in printed advertisements, conceals such images and text by distorting them, surrounding them by meaningless squiggles and shapes, or placing them in unexpected locations. The marketers have become very clever. They know that consumers have become discerning and hate in the face advertising. So they use subterfuge and trick a consumer into subliminal advertising.

Blind Trail: a type of testing where two competing products are placed in front of the customers without their labels. The customer has to sample the products and tell which of the products is better. Blind trail is a way to cut through the hype of advertising. Marketers believe that in most cases customers are not buying products rather they are buying a dream or living a dream. They do not smoke a cigarette they are living a life style.

Pepsi has claimed that its product was better than Coke based on the blind tests made. Their argument was so convincing that even Coca-Cola bought the idea and introduced new Coke. New Coke was rejected by the customers who overwhelmingly choose the old classic taste over the new sweet taste.

But an interesting twist for the blind test was done by Revlon when they came to India. They did a test where young women were given two sets of lipsticks. One lipstick had “Made in India” on it and the other said “made in USA”. Two weeks later visiting researchers were told that “Made in USA” lipstick was better than “Made in India” lipstick. Unknown to the young women both the lipstick were made in India but one had the label of “Made in USA” put on it deliberately. This was done to find out if Made in USA label will make the young women feel that the product performs better than the one made in India. Talk of imagery playing tricks on our rational brain!

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