Concept of Viral Marketing

Concept of Viral Marketing

Juvertson and Draper was developed the viral marketing In 1997, they described free email service for Hotmail, explained term ―viral marketing as ―network-enhanced Word-of-Mouth.WOM includes ―Interactive Marketing, viral marketing, Internet communication, Internet word of mouth and word of mouse, buzz marketing, online feedback, interactive or electronic word of mouth advertising and social sites referral.

Viral marketing, in sum, may be described as any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence. Like viruses, such strategies take advantage of rapid multiplication to explode the message to thousands, to millions.

What is meant by Viral Marketing?

(Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, February 1, 2005. Originally published 2/1/2000)

Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence. Like viruses, such strategies take advantage of rapid multiplication to explode the message to thousands, to millions.

Off the Internet, viral marketing has been referred to as "word-of-mouth," "creating a buzz," "leveraging the media," "network marketing." But on the Internet, for better or worse, it's called "viral marketing." While others smarter than I have attempted to rename it, to somehow domesticate and tame it, I won't try. The term "viral marketing" has stuck.

Impact and Incidence of Tax

Public Finance: Impact, shifting and Incidence of Taxation

Tax incidence | Impact of Tax, Shifting of Tax | Ultimate Burden | Immediate burden of tax

The burden of this tax does not always lie on the person who is imposed the tax in first instance, it may also burden to other person. So the person who initially pays the tax may not bear this burden, he can shift it to other person. Hence, we need to know who bears the immediate burden of tax and who bears the ultimate burden of a tax, as the result we have to make clear the concept of impact of a tax and incidence of a tax.

Tax Impact or Impact of Taxation

                   Impact of taxation refers to the immediate burden of the tax. The impact of a tax is the immediate result of the imposition of a tax on the person who pays it in the first instance.

The impact of tax refers how introduction of taxation or the raising of tax levels, on a particular product or service, affects usages of product or service. The introduction or increase of tax, for example, usually results in the product or service being purchased less often. As a result, the impact of tax, or tax impact, is usually negative for the development of an economy, as it hinders and reduces spending, which is necessary for the growth of an economy.

Tax Incidence

Tax incidence is the degree to which a given tax is paid or borne by a particular economic unit such as consumers, producers, employers, employees etc. When we say that the tax incidence of a given tax falls on Mr. Z, it means Mr. Z ultimately pays or bears the burden of tax in greater proportion.

The incidence of a tax rests on the person (s) whose real net income is reduced by the tax. It is fundamental that the real burden of taxation does not necessarily rest upon the person who is legally responsible for payment of the tax. General sales taxes are paid by business firms, but most of the cost of the tax is actually passed on to those who buy the goods that are being taxed. In other words, the tax is shifted from the business to the consumer. Taxes may be shifted in several directions. Forward shifting takes place if the burden falls entirely on the user, rather than the supplier, of the commodity or service in question—e.g., an excise tax on luxuries that increases their price to the purchaser. Backward shifting occurs when the price of the article taxed remains the same but the cost of the tax is borne by those engaged in producing it—e.g., through lower wages and salaries, lower prices for raw materials, or a lower return on borrowed capital. Finally, a tax may not be shifted at all—e.g., a tax on business profits may reduce the net income of the business owner.

Keywords: Tax incidence, Impact of Tax, Shifting of Tax, Ultimate Burden, Immediate burden of tax

Free Abstract on Micro Marketing

What is Micro-marketing?

Micro-marketing refers to the customization of marketing mix variables to the store-level. This paper shows how prices can be profitably customized at the store-level, rather than adopting a uniform pricing policy across all stores. Historically, there has been a trend by retailers to consolidate independent stores into large national and regional chains. This move toward consolidation has been driven by the economies of scale associated with these larger operations. However, some of these large chains have lost the adaptability of independent neighborhood stores. Micro-marketing represents an interest on the part of managers to combine the advantages of these large operations with the flexibility of independent neighborhood stores. A basis for these customized pricing strategies is the result of differences in inter brand competition across stores. These changes in inter brand competition are measured using weekly store-level scanner data at the product level. Obviously, this presents a huge estimation problem, since we wish to measure substitution between each product at a store-level. For a chain with 100 stores and 10 products in a category we would need to estimate over 100,000 parameters. To reliably estimate these individual store differences we phrase our problem in a hierarchical Bayesian frame-work. Essentially, each store-level parameter can be thought of as a combination of chain-level and random store-specific effects. The improvement in estimating this model comes from exploiting the common chain-level component. In addition, we relate these store-specific changes to demographic and competitive characteristics of the store's trading area, which helps explain why these differences are present. These estimated differences in price response are in turn used to set store-level prices. To simplify and focus the problem we limit our attention to everyday price changes (i.e., the prices of products that are not advertised). There are many marketing variables that can be adjusted at a store-level (e.g., promotions and product assortments); the reason we concentrate upon everyday pricing is driven by its importance in the marketing mix, that most profits are earned on products sold at their everyday price, and the amenability of everyday prices to store-level customizations. A limitation of this approach is that it yields only a partial solution to the retailer's global optimization problem. A challenge for the retailer in implementing micro-marketing pricing strategies is to retain a consistent image while altering prices that adapt to neighborhood differences in demand. Our approach is to search for price changes that leave image unchanged. We argue that a sufficient condition for holding the input to store image constant from everyday pricing is to hold average price and revenues at their current levels. We implement this condition by introducing constraints into the profit maximization problem. Future research into store choice may yield more efficient conditions. A benefit of holding the retailer's image constant is that it does not require costly new information about competitors and promotional activity. Instead, retailers are able to derive these store-level customizations based largely upon scanner data. This is very advantageous since this information is already being collected and is readily available. Our results indicate that micro-marketing pricing strategies would be profitable and could increase gross profit margins by 4 percent to 10 percent. When these gross profit gains are considered after administrative and operating costs are taken into account, they could increase operating profit margins by 33 percent to 83 percent. These gains come from encouraging consumers through everyday price changes to switch to more profitable bundles of products, and not through overall price changes at the chain-level. These results show that the information contained in the retailer's store-level scanner data is an under-utilized resource. By exploiting this information using newer and more powerful computational techniques managers can better appreciate its value. The implication is that profits could be increased and gains can be made by using this information as the basis for micro-marketing.

Keywords: Micro-marketing, customization, Consumer-oriented marketing

Source:

  Alan L. Montgomery, Marketing Science. Vol. 16, No. 4 (1997), pp. 315-337, Published by: INFORMS. Article Stable URL:http://www.jstor.org/stable/184229