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!

Marketing Principles

Moore’s law: One of the most  important  laws  if one  is  interested  in Information Technology. Moore’s law states that in the internet economy the speed of the processor doubles every 18 months while the cost of the processor falls by 50%.

This principle is very ideally suited for an IT chip maker like Intel. The existing competitors’ can try to match the speed of the processor or the cost. It would be a brave heart who can try to meet both the parameters. By the time the competitors’ R & D department works out the solution and can come with a processor which can match speed and the cost the target has already moved. INTEL by that time will release a processor twice the speed and at half the cost. Talk about double whammy!

Iceberg principle: Iceberg principle states that an iceberg hides more than what it reveals. A floating iceberg looks very small and can fool anyone into thinking that it is very small. Same is the case with any feedback and control mechanism. One should not blindly depend on the data and should probe deep enough to see if anything is being hidden beneath the apparent truth.

Murphy’s Law: Very famous principle. It says “what can go wrong will go wrong”. What is not said in the principle is "finally". We are all eternal optimists; we take too many chances and believe in our luck factor. One may come late to the college every day and it does not matter at all. But the day when we are late to a job interview – the interviewer does not allow that person to take the interview. We need to understand that every day and every occasion has to be treated as if it is the only day or occasion that we are living for. In the modern world one does not get a second chance.

Peter’s principle: Peter’s principle says “every person will rise to the level of his/her incompetence in an organization”. Hold on!. The principle says incompetence and not competence as it is popularly believed. What the principle says is that one can’t be promoted beyond one’s incompetence. That is a person’s incompetence decides his/her rise in the organization. For example a sales manager might be very good in selling but not have skills in administration, finance and Human Resource Management. So the sales manager can’t be promoted unless he gets more skills and knowledge or in other words he/she has to increase his/her level of his/her incompetence.

Pareto’s law: also called the 80-20 principle. Pareto’s principle says that 20% of the activities take 80% of the time and that the rest of the 80% of the activities take-up 20% of the time. Or 20% of the customers give 80% of the orders and the other 80% of the customers give only 20% of the orders. So to control the maximum activities or to maximize orders it is better to concentrate on the 20% of the activities or 20% of the customers.

Time will expand to cover the job: Human beings are very adaptable. We tend to expand the job so that it expands to cover the time. In simple words if the boss gives us one week we would take one week to finish the job, fifteen days if fifteen days are given and one day if only one day is given. In other words do not procrastinate and try to finish the job as early as possible and do not keep anything pending.