LITERATURE REVIEW

CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION
This chapter will be used to review all the necessary related literature for this research. The meanings and definitions of some of the key terms in this study will be discussed too.
The researcher will discuss some of the terms of E-Business as it relates to this work before embarking on the research.
The researcher will start by looking at what other researchers suggested that might prevent SMEs from adopting effective Internet marketing, discuss and analyze some of the winning Internet marketing strategies and methods that were recommended to be adopted by any E-businesses.
The summary of the chapter will be made at the end of this chapter.

2.2 Small Businesses
The terms “SME” and “small business” are often used interchangeably. The definition of a small business as outlined by the Small Businesses Act 1953 is “one which is independently owned and operated and not dominant in its field of operation.” Hodgetts (2001)
Another definition of small businesses which used by European Commission is that they are privet companies with fewer than 250 employees and their annual turnover does not exceed 50 million EUR, and/or their annual balance sheet total does not exceed 43 million EUR. (European Commission 2003)

According to European Commission (2003) the SME sector is made up of 3 components:

1. Micro-enterprises: those with between 1 and 9 employees, their turnover is equal or more than 50 million EUR or their balance sheet total is equal or more than 43 million EUR.
2. Small enterprises: those with 10 to 50 employees, their turnover is equal or more than 10 million EUR or their balance sheet total is equal or more than 10 million EUR.
3. Medium enterprises: those with 50-250 employees, their turnover is equal or more than 2 million EUR or their balance sheet total is equal or more than 2 million EUR. (European Commission 2003)

For the purpose of this study, the definition provided by Small Businesses Act (1953) will be used when referring to small businesses and the term SME will remain as defined by the European Commission. (2003)

This sector was chosen because according to European Commission Small and Medium-sized Enterprise (SMEs) are the main drivers of the economy and represent 99 % of all the enterprises in the EU and also provide for almost 65 million jobs; furthermore SMEs contribute hugely to the economy, entrepreneurship and innovation . (European Commission 2006)

SMEs in UK according to Yeo (2002) employing fifty seven per cent of the workforce, moreover and according to Small Business Service (2006) in 2005 there were approximately 4.3 million businesses in the UK. 99.3 percent of them are small (0 to 49 employees). 27,000 (0.6 per cent) are medium-sized (50 to 249 employees) and 6,000 (0.1 per cent) are large (250 or more employees).

Effective use of Internet marketing can provide SMEs with a low cost gateway to wider markets and offers them huge opportunities. Also good planned strategic approach if adopted by SMEs can help to overcome many of the barriers and obstacles that they might face.

E-marketing strategies, tools and techniques for SMEs

Employing effective and economical E-marketing strategies, tools and techniques for SMEs

Small businesses that are the main drivers of the economy and represent 99 % of all the enterprises in the EU and also provide for almost 65 million jobs are facing huge competition online.

Effective use of Internet marketing can provide SMEs with a low cost gateway to wider markets and offers them huge opportunities. Also good planned strategic approach if adopted by SMEs can help to overcome many of the barriers and obstacles that they might face.


1.1 Introduction:
Businesses and consumers nowadays increasingly rely on the Internet as both a primary revenue generator and information provider. It also has become a key element of the global economy and a major driver of new businesses. (UNCTAD 2006) The Internet also offers opportunities for companies to market their products and services around the world without physically making contact with customers or forced to advertise in other parts of the world.

The growth of E-Business attracted big companies to invest heavily on online advertising to attract more consumers to their business and furthermore start building reputation, which include the reputation of the firm itself, the brand name, and the product or consumer experience. (IAB 2006)

Online advertising with growth of 40.3% in year 2006 (IAB 2006) remains to be the fastest growing advertising medium in the advertising market; it has become a popular advertising channel attracting much media attention, and raises fresh opportunities and challenges.
The latest report by (IAB 2006) showed a record spending of online advertising during the first half of 2006, reaching £917.2m, (£1,653.2m in 2005), which increases the online advertising market share to 10.5%, up from 7.3% for the first half of 2005.

1.2 The Main Drivers for Online Advertising
The increase of the online population and the e-commerce boom are fuelling this growth, and also:

1. The dramatic increase of broadband users , (IAB 2006)
2. The increase number of online shoppers . (Lombardi 2006)
3. The increase of the money online shoppers spends . (IAB 2006)
4. The increase of the average time shoppers spends online.
5. Cheaper and faster Internet access.
6. Cheaper and more reliable computer hardware and software.

And further to the above, the cost effective and highly targeted nature of E-Marketing, together with the ability to monitor the results quickly and precisely, which meant that any E-marketing campaigns can be improved in real time to produce the best possible results and return on investment.( Rafi Mohammed et al. 2003)
Though it is widely accepted that the Internet offers companies a wide range of opportunities, there is still a lack of adoption of effective Internet marketing among SMEs to be able to exploit the Internet.

1.3 Research Context
This study is to examine the Internet marketing strategies and techniques which currently adopted by SMEs in all sectors in the UK, and furthermore investigate and analyse the existing issues that prevent these SMEs form identifying and employing effective and economical Internet marketing.

1.4 Research Problem
SMEs with small business budget and limited knowledge and expertise can not identify and use effective Internet marketing strategies and techniques to be able to compete online with larger businesses and to enable them to strengthen their online presence.

1.5 Research Questions

1. Why do SMEs fail to identify and employ effective and economical Internet marketing?
2. How SMEs with small business budget and limited resources and expertise identify and use E-Marketing strategies and techniques to compete online with large businesses?

1.6 Research Aim
Identify effective and economical e-marketing strategies, tools and techniques for SMEs to improve their competitiveness and to enable them to strengthen their online presence.

1.7 Research Objectives

1. Investigate and analyse the existing issues that prevent SMEs form identifying and employing effective e-marketing framework.
2. Identify and analyse online advertising strategies and techniques of small businesses.
3. Suggest an effective and economical E-marketing strategies and techniques for SMEs to follow.

1.8 Research Value (what does it contribute to IT research/practice)
The outcome of this research will help system analyst and web site designers to plan, design and implement E-commerce site that optimized for search engines.
Furthermore by highlighting the importance of Internet marketing, system analyst will be encouraged to design inexpensive and easy to use systems for small businesses.

1.9 Research Rationale
This research will help small businesses understand the impertinence of Internet marketing to their business and use it to gain competitive advantage, reaching new customers and expending their market share and also permit SMEs to sell globally.
Furthermore the researcher thinks that the field of Internet marketing is not investigated properly in the past because it is new emerging technology.

The study also helped the researcher himself understand Internet marketing’s strategies and methods, and also understand the problems that prevent small businesses from using it to compete successfully online either locally or globally.

1.10 Research Strategy & Methodology Overview
The multiple explanatory case study methodology will be used for this study, concerning competitive disadvantages affecting SMEs in the UK.
In order to solve the research question the case study methodology was chosen among the other theories because case study method involves using multiple sources and techniques in the data gathering process, furthermore because the researcher needs to know how and why E-marketing campaign had worked or not, according to (Yin 2003) how and why questions are more explanatory and will lead to the use of case studies as the preferred strategy.
The case study will investigate issues such as E-Marketing and advertising strategies and techniques; however before defining the research problems data gatherings will be carried out using quantitative and qualitative methods such as semi structured interviews, questionnaires, direct observation and documentations, focusing on the “what” and “how” questions (Yin 2003), moreover the researcher will state how the data was collected and analysed.
The researcher will select SMEs as the unit of analysis (Tellis 1997); focusing on their marketing strategies and techniques, and the outcome of this case study will be represented in report format.

1.11 Research Scope and Limitations
There was not enough up to date information regarding SMEs and their use of online marketing.
Furthermore the researcher thinks if more small businesses participated in the survey that could generated more data which could help the research. Also the researcher was restricted to analyse only the data which came from companies who have responded to the survey.
Moreover the time limit for organising the interview and getting appointments with the interviewee. The time limit also prevented the researcher from making further efforts in getting more studies in this field.

1.12 Thesis Layout
This dissertation will contain the following seven chapters:
A short introduction to the entire report will be in chapter one. It will provide a brief background of the study, the aims and objectives of the research, the research study methodology that will be used in this study, data gathering methods and finally the layout of the dissertation.
A review and analysis of past and present literature concerning different issues that affect and prevent small businesses from adopting effective Internet marketing will be in chapter two.
Chapter three will discuss the methodology used in this research; furthermore explain the data gathering methods and the way that data was analysed.
Chapter four will analyse the data gathered in relation to the research problem, questions and objectives.
Chapter five will evaluate and discuss the out come of the research.
The conclusion will be in chapter six, which will include the summary of the research and suggest future recommendations.
Chapter seven is the self evaluation of the research.

1.13 SUMMARY
This chapter started with short introduction to the dissertation followed by the aims and objectives of the study by discussing what the study would attempt to achieve on the long run.
A background to the proposed study was provided by drawing attention to the concept of adopting some Internet strategies that will influence SME’s and the issues predominantly raised in the said sector.

Section 1.4 stated the research questions that will guide the study, followed closely by a summary of the theoretical framework that this study will be based. Section 1.5 is the research methodology that describes the methods that would be utilised to obtain data for the study before progressing to provide an outline of the following chapters of the dissertation.
In the next chapter, a literature review will be done and the theoretical framework will be further expatiated on.

Guide to web analytics

When collecting data tracking or metrics web analyst should always ask themselves what actions they will take based on knowing this information? If the answer is none, then the data is not worth tracking or collecting read more...

UK Online office supplier

Euroffice is the UK's leading online office supplier. They sell more office products than any other online company in the UK such offers office products, equipment and computer supplies for small to mid-sized businesses. Products are well categorised, making it easy for customers to find what they are looking for. Whether customers are looking for envelopes, fax machines or filing cabinets, Euroffice offer credit accounts, overnight delivery, and shopper profiles to make life easier.

Azcars.co.uk is your gateway to the best sites on the Internet for cars!

Azcars.co.uk is your gateway to the best sites on the Internet for cars! Looking for Car Audio, Movies, or Music? Browse their recommended resources or just try the Azcars.co.uk search.

Product guides provide expert advice and information on our range of products.

Product guides provide expert advice and information on our range of products, which include scientific calculator

Negative effects of advertising

An extensively documented effect is the control and vetoing of free information by the advertisers. Any negative information on a company or its products or operations often results in pressures from the company to withdraw such information lines, threatening to cut their ads. This behaviour makes the editors of the media self-censor content that might upset their ad payers. The bigger the companies are, the bigger their relation becomes, maximising control over a single piece of information.

Advertisers may try to minimise information about or from consumer groups, consumer-controlled purchasing initiatives (as joint purchase systems), or consumer-controlled quality information systems.

Another indirect effect of advertising is to modify the nature of the communication media where it is shown. Media that get most of their revenues from publicity try to make their medium a good place for communicating ads before anything else. The clearest example is television, where broadcasters try to make the public stay for a long time in a mental state that encourages spectators not to switch the channel during advertisements. Programs that are low in mental stimulus, require light concentration and are varied are best for long sitting times. These also make for much easier emotional transition to ads, which are occasionally more entertaining than the regular shows. A simple way to understand objectives in television programming is to compare the content of programs paid for and chosen by the viewer with those on channels that get their income mainly from advertisements.

In several books, articles and videos, communication professor Sut Jhally has argued that pervasive commercial advertising, by constantly reinforcing a bogus association between consumption and happiness and by focusing on individual immediate needs, leads to a squandering of resources and stands in the way of a discussion of fundamental societal and long-term needs.

http://en.wikipedia.org/wiki/Advertising

The impact of advertising

The impact of advertising has been a matter of considerable debate and many different claims have been made in different contexts. During debates about the banning of cigarette advertising, a common claim from cigarette manufacturers was that cigarette advertising does not encourage people to smoke who would not otherwise. The (eventually successful) opponents of advertising, on the other hand, claim that advertising does in fact increase consumption.

According to many sources, the past experience and state of mind of the person subjected to advertising may determine the impact that advertising has. Children under the age of four may be unable to distinguish advertising from other television programs, while the ability to determine the truthfulness of the message may not be developed until the age of 8.

Over the past fifteen years a whole science of marketing analytics and marketing effectiveness has been developed to determine the impact of marketing actions on consumers, sales, profit and market share. Marketing Mix Modeling, direct response measurement and other techniques are included in this science.

http://en.wikipedia.org/wiki/Advertising

Advertising

Advertising is paid or sometimes free communication through a medium in which the sponsor is identified and the message is controlled. Variations include publicity, public relations, product placement, sponsorship, underwriting, and sales promotion. Every major medium is used to deliver these messages, including: television, radio, movies, magazines, newspapers, the Internet, and billboards. Advertisements can also be seen on the seats of grocery carts, on the walls of an airport walkway, on the sides of buses, heard in telephone hold messages and in-store PA systems. Advertisements are usually placed anywhere an audience can easily and/or frequently access visuals and/or audio, especially on clothing.

Advertising clients are predominantly, but not exclusively, for-profit corporations seeking to increase demand for their products or services. Some organisations that frequently spend large sums of money on advertising but do not strictly sell a product or service to the general public include: political parties, interest groups, religion-supporting organisations, and militaries looking for new recruits. Additionally, some non-profit organizations are not typical advertising clients and rely upon free channels, such as public service announcements. For instance, a well-known exception to the use of commercial advertisements is Krispy Kreme doughnuts which relies on word-of-mouth.

The advertising industry is large and growing. In the United States alone in 2005, spending on advertising reached $144.32 billion, reported TNS Media Intelligence. That same year, according to a report titled Global Entertainment and Media Outlook: 2006-2010 issued by global accounting firm PricewaterhouseCoopers, worldwide advertising spending was $385 billion. The accounting firm's report projected worldwide advertisement spending to exceed half-a-trillion dollars by 2010.

While advertising can be seen as necessary for economic growth, it is not without social costs. Unsolicited Commercial Email and other forms of spam have become so prevalent as to have become a major nuisance to users of these services, as well as being a financial burden on internet service providers.[1] Advertising is increasingly invading public spaces, such as schools, which some critics argue is a form of child exploitation.[2][3] One scholar has argued that advertising is a toxic by-product of industrial society which may bring about the end of life on earth.[4]

References

1. http://interviews.slashdot.org/article.pl?sid=03/03/03/1528247&tid=111
2. http://www.commercialalert.org/
3. http://www.media-awareness.ca/english/parents/marketing/marketers_target_kids.cfm
4. Sut Jhally, http://www.mediaed.org/videos/CommercialismPoliticsAndMedia/Advertising_EndOfWorld

http://en.wikipedia.org/wiki/Advertising

Word of mouth marketing

Word-of-Mouth Marketing, or WOMM, is a term used in the marketing and advertising industry to describe activities that companies undertake to generate personal recommendations as well as referrals for brand names, products and services.

Word-of-mouth promotion is highly valued by advertisers. It is believed that this form of communication has valuable source credibility. Research points to individuals being more inclined to believe WOMM than more formal forms of promotion methods; the receiver of word-of-mouth referrals tends to believe that the communicator is speaking honestly and is unlikely to have an ulterior motive (i.e. they are not receiving an incentive for their referrals).[1] In order to promote and manage word-of-mouth communications, marketers use publicity techniques as well as viral marketing methods to achieve desired behavioral response. Influencer marketing is increasingly used to seed WOMM by targeting key individuals that have authority and a high number of personal connections.

A very successful word-of-mouth promotion creates buzz. Buzz generates a highly intense and interactive form of word-of-mouth referral that occurs both online and offline. Successful word-of-mouth initiatives do not follow a strictly linear process with information flowing from one individual to another. Rather, successful models leverage subgroup connectivity and relationships by pursuing a Reed's Law hub approach to message distribution. A marketer has successfully created buzz when the interactions are so intense that the information moves in a matrix pattern rather than a linear one. The result is everyone is talking about or purchase the product or service.

Examples

1. Gmail - Google did no marketing, they spent no money. They created scarcity by giving out Gmail accounts only to a handful of "power users." Other users who aspired to be like these power users "lusted" for a Gmail account and this manifested itself in their bidding for Gmail invites on eBay. Demand was created by limited supply; the cachet of having a Gmail account caused the word of mouth, rather than any marketing activities by Google.
2. Chain e-mail about certain product/service can be considered as word of mouth marketing.World famous examples of Viral Marketing
3. Microsoft’s Origami Project campaign
4. Tupperware popularization
5. Popularization of text messaging
6. Popularization of chat
7. BMW’s Mini Cooper campaign
8. Ford Motor’s Evil Twin campaign
9. Jamie Kane game (BBC sponsored)
   

Contrast with (non-examples)

1. Hotmail - Hotmail "piggybacked" on personal emails from one person to another to publicize their free email service. At a time when few people had email, the first and only free email service in the marketplace was appealing and novel -- hence their rapid adoption and spread. However, the same "piggybacking" technique currently employed by all free email providers (except gmail) no longer works. Furthermore, the Hotmail users did not voluntarily pass it on; they had no choice about Hotmail adding the "sign up" link at the end of their personal emails.
2. Burger King's Subservient Chicken - Burger King's marketing program called Subservient Chicken did indeed generate a lot of word of mouth, but the word of mouth was about the marketing campaign instead of the product that was being marketed. Also, those marketing efforts which rely on being edgy or on some kind of stunt often fade quickly when the novelty or edge wears off. Finally, this type of marketing is not reproducible or sustainable since it won't be edgy the second time around.
3. McDonald's LincolnFry - a fake blog was discovered, and it generated lots of negative word of mouth and little participation.
4. American Express' billboard - a fake blog poster who told readers to check out a great Amex billboard was found to be an Ogilvy employee; this violation of trust resulted in massive negative word of mouth which spread around the world.
   

References

1. Grewal, R., T.W. Cline, and A. Davies, 2003. Early-Entrant Advantage, Word-of-Mouth Communication, Brand Similarity, and the Consumer Decision-Making Process. Journal of Consumer Psychology, 13(3).

Source: http://en.wikipedia.org/wiki/Word_of_mouth_marketing

Loyalty business model

The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.

The service quality model
A model by Kay Storbacka, Tore Strandvik, and Christian Gronroos (1994), the service quality model, is more detailed than the basic loyalty business model but arrives at the same conclusion. In it, customer satisfaction is first based on a recent experience of the product or service. This assessment depends on prior expectations of overall quality compared to the actual performance received. If the recent experience exceeds prior expectations, customer satisfaction is likely to be high. Customer satisfaction can also be high even with mediocre performance quality if the customer's expectations are low, or if the performance provides value (that is, it is priced low to reflect the mediocre quality). Likewise, a customer can be dissatisfied with the service encounter and still perceive the overall quality to be good. This occurs when a quality service is priced very high and the transaction provides little value.

This model then looks at the strength of the business relationship; it proposes that this strength is determined by the level of satisfaction with recent experience, overall perceptions of quality, customer commitment to the relationship, and bonds between the parties. Customers are said to have a "zone of tolerance" corresponding to a range of service quality between "barely adequate" and "exceptional." A single disappointing experience may not significantly reduce the strength of the business relationship if the customer's overall perception of quality remains high, if switching costs are high, if there are few satisfactory alternatives, if they are committed to the relationship, and if there are bonds keeping them in the relationship. The existence of these bonds acts as an exit barrier. There are several types of bonds, including: legal bonds (contracts), technological bonds (shared technology), economic bonds (dependence), knowledge bonds, social bonds, cultural or ethnic bonds, idiological bonds, psychological bonds, geographical bonds, time bonds, and planning bonds.

This model then examines the link between relationship strength and customer loyalty. Customer loyalty is determined by three factors: relationship strength, perceived alternatives and critical episodes. The relationship can terminate if: 1) the customer moves away from the company's service area, 2) the customer no longer has a need for the company's products or services, 3) more suitable alternative providers become available, 4) the relationship strength has weakened, or 5) the company handles a critical episode poorly.

The final link in the model is the effect of customer loyalty on profitability. The fundamental assumption of all the loyalty models is that keeping existing customers is less expensive than acquiring new ones. It is claimed by Reichheld and Sasser (1990) that a 5% improvement in customer retention can cause an increase in profitability between 25% and 85% (in terms of net present value) depending upon the industry. However, Carrol and Reichheld (1992) dispute these calculations, claiming that they result from faulty cross-sectional analysis.

According to Buchanan and Gilles (1990), the increased profitability associated with customer retention efforts occurs because:

• The cost of acquisition occurs only at the beginning of a relationship: the longer the relationship, the lower the amortized cost.
• Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
• Long term customers tend to be less inclined to switch and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume.
• Long term customers may initiate free word of mouth promotions and referrals.
• Long term customers are more likely to purchase ancillary products and high-margin supplemental products.
• Long term customers tend to be satisfied with their relationship with the company and are less likely to switch to competitors, making market entry or competitors' market share gains difficult.
• Regular customers tend to be less expensive to service because they are familiar with the processes involved, require less "education," and are consistent in their order placement.
• Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction in a virtuous circle.

For this final link to hold, the relationship must be profitable. Striving to maintain the loyalty of unprofitable customers is not a viable business model. That is why it is important for marketers to assess the profitability of each of its clients (or types of clients), and terminate those relationships that are not profitable. In order to do this, each customer's "relationship costs" are compared to their "relationship revenue." A useful calculation for this is the patronage concentration ratio. This calculation is hindered by the difficulty in allocating costs to individual relationships and the ambiguity regarding relationship cost drivers.

Expanded models
Schlesinger and Heskett (1991) added employee loyalty to the basic customer loyalty model. They developed the concepts of "cycle of success" and "cycle of failure". In the cycle of success, an investment in your employees’ ability to provide superior service to customers can be seen as a virtuous circle. Effort spent in selecting and training employees and creating a corporate culture in which they are empowered can lead to increased employee satisfaction and employee competence. This will likely result in superior service delivery and customer satisfaction. This in turn will create customer loyalty, improved sales levels, and higher profit margins. Some of these profits can be reinvested in employee development thereby initiating another iteration of a virtuous cycle.

Fredrick Reichheld (1996) expanded the loyalty business model beyond customers and employees. He looked at the benefits of obtaining the loyalty of suppliers, employees, bankers, customers, distributors, shareholders, and the board of directors.

Data collection
Typically, loyalty data is being collected by multi-item measurement scales administered in questionnaires. However, other approaches sometimes seem more viable if managers want to know the extent of loyalty for an entire data warehouse. This approach is described in Buckinx, Verstraeten & Van den Poel (2006).

Loyalty and Egoism
The loyalty business model assumes the philosophical validity of pursuit of self-interest. However, much work in ethics assumes the validity of altruism (seeking the best interest of others). "Clearing Up the Egoist Difficulty with Loyalty" (Stieb 2006), attempts to show that when interests are shared there becomes no difference between seeking one's interest and that of others. This is also called the "Aristotelian" model based on Aristotle's related analysis of friendship in his Nicomachean Ethics.

See also Loyalty Marketing

References

1. Buchanan, R. and Gilles, C. (1990) "Value managed relationship: The key to customer retention and profitability", European Management Journal, vol 8, no 4, 1990.
2. Buckinx W., Geert Verstraeten, and Dirk Van den Poel (2007), "Predicting customer loyalty using the internal transactional database," Expert Systems with Applications, 32 (1).
3. Carrol, P. and Reichheld, F. (1992) "The fallacy of customer retention", Journal of Retail Banking, vol 13, no 4, 1992.
4. Dawkins, P. and Reichheld, F. (1990) "Customer retention as a competitive weapon", Directors and Boards, vol 14, no 4, 1990.
5. Fornell, C. and Wernerfet, B. (1987) "Defensive marketing strategy by customer complaint management : a theoretical analysis", Journal of Marketing
6. Moloney, Chris X. (2006) "Winning Your Customer’s Loyalty: The Best Tools, Techniques and Practices" AMA Workshop Event(s). Misc. materials distributed related to event(s). San Diego, 2006. Chris X. Moloney
7. Reichheld, F. (1996) The Loyalty Effect, Harvard Business School Press, Boston, 1996.
8. Reichheld, F. and Sasser, W. (1990)"Zero defects: quality comes to services", Harvard Business Review, Sept-Oct, 1990, pp 105-111.
9. Schlesinger, L. and Heskett, J. (1991) "Breaking the cycle of failure in service", Sloan Management Review, spring, 1991, pp. 17-28.
10. Stieb, James A. (2006) "Clearing Up the Egoist Difficulty with Loyalty", Journal of Business Ethics, vol 63, no 1.
11. Storbacka, K. Strandvik, T. and Gronroos, C. (1994) "Managing customer relationships for profit", International Journal of Service Industry Management, vol 5, no 5, 1994, pp 21-28.

Source: http://en.wikipedia.org/wiki/Loyalty_business_model

Loyalty program

Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour - behaviour which is potentially of benefit to the firm.

In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, or club card is a plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a loyalty program. Loyalty cards are a system of the loyalty business model. In the United Kingdom it is typically called a loyalty card, in Canada a rewards card or a points card, and in the United States either a discount card, a club card or a rewards card. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip cards. Small keyring cards are often used for convenience.

A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff.

The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its marketing research.

Where a customer has provided sufficient identifying information, the loyalty card may also be used to access such information to expedite verification during receipt of cheques or dispensing of medical prescription preparations, or for other membership privileges (e.g., access to a club lounge in airports, using a frequent flyer card).

Source: http://en.wikipedia.org/wiki/Loyalty_program

Loyalty marketing

Loyalty marketing is an approach to marketing, based on strategic management, in which a company focuses on growing and retaining existing customers through incentives. The discipline of customer loyalty marketing has been around for many years, but expansions from it merely being a model for conducting business to becoming a vehicle for marketing and advertising have made it omnipresent in consumer marketing organizations since the mid- to late-1990s. Some of the newer loyalty marketing industry insiders, such as Chris X. Moloney and Fred Reichheld, have claimed a strong link between customer loyalty marketing and customer referral. In recent years, a new marketing discipline called "customer advocacy marketing" has been combined with or replaced "customer loyalty marketing." To the general public, many airline miles programs, hotel frequent guest programs and credit card incentive programs are the most visible customer loyalty marketing programs.[1]

History of loyalty marketing
On May 1, 1981 American Airlines launched the first full-scale loyalty marketing program of the modern era with the AAdvantage miles program.[2] This revolutionary program was the first to reward "frequent fliers" with reward miles that could be accumulated and later redeemed for free travel. Many airlines and travel providers saw the incredible value in providing customers with an incentive to use a company exclusively and be rewarded for their loyalty. Within a few years, dozens of travel industry companies launched similar programs. The AAdvantage program now boasts over 50 million active members. [3]

American Airlines' AAdvantage program can trace some of its roots to S&H Greenstamps which were a popular retail reward coupon issued very commonly from the 1930s through the 1980s. Typically, as a consumer shopped at various grocery and dry good stores, they would receive a set number of Green Stamps that could be pasted into booklets and redeemed for prizes. [4]

Another early "loyalty marketing" program was created by baking brand Betty Crocker. In 1929, Betty Crocker issued coupons that could be used to redeem for items like free flatware. In 1937 the coupons were printed on the outside of packages, and later the Betty Crocker points program produced a popular reward catalog from which customers could pick rewards using their points. In 2006, it was announced that the Betty Crocker Catalog was going out of business and that all points needed to be redeemed by December 15, 2006. With it, one of the earliest loyalty programs ends a 77 year tradition. [5]

Loyalty marketing impact
Many loyalty programs have changed the way consumers interact with the companies from which they purchase products or services from and how much consumers spend. Many consumers in the US and Europe have become quite accustomed to the rewards and incentives they receive by being a "card carrying" member of an airline, hotel or car rental program. In addition, research from Chris X. Moloney shows that nearly 1/2 of all credit card users in the US utilize a points-based rewards program. [6]

In recent years, the competition for high income customers has led many of these loyalty marketing program providers to provide significant perks that deliver value well beyond reward points or miles. Both American's AAdvantage program and Starwood Hotels' Preferred Guest program have received industry awards, called "Freddie Awards" by Inside Flyer Magazine and its publisher Randy Petersen for providing perks that customers value highly. These perks have become as important to many travelers as their reward miles according to research.

In his book, Loyalty Rules!, Fred Reichheld details the value to customer referral on the growth and financial performance of dozens of leading US firms. Reichheld purports that the measurement of company advocates, or promoters, is the strongest single measurable correlation between customers and corporate performance. Similarly, Chris X. Moloney has presented new findings ((Loyalty World London 2006)) that showed a magnetic value to a company to promote and measure customer referrals and advocacy via research and marketing.

Loyalty marketing and the loyalty business model
The loyalty business model relies on training of employees to achieve a specific paradyme: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability. Loyalty marketing is an extension of that effort, relying upon word-of-mouth and advertising to draw upon the positive experiences of those exposed to loyalty business model inspired ventures to attract new customers. Fred Reichheld makes the point in his books that one can leverage the "power of extension" to draw new customers.[7]

The rapid expansion of frequent-flyer programs is due to the fact that loyalty marketing relies on the earned loyalty of current customers to attract new loyalty from future customers. Incentive programs that are exclusive must strike a balance between increasing benefits for new customers over any existing loyalty plan they are currently in and keeping existing customers from moving to new plans. Hallmark did this through devising a program that directly rewarded customers not only for buying merchandise and utilizing Hallmark.com, but gaining additional benefits through referring their friends.[8]

The most recent loyalty marketing programs rely on viral marketing techniques to spread word of incentive and inducement programs through word of mouth.


References

1. Reichheld, F. (1996) Loyalty Rules!, Harvard Business School Press, Boston, 2001.
2. Philip Kotler. According to Kotler: The World's Foremost Authority on Marketing Answers Your Questions. AMACOM Div American Mgmt Assn. 2005. ISBN 0814472958
3. http://www.aa.com/content/AAdvantage/programDetails/main.jhtml
4. Dawkins, P. and Reichheld, F. (1990) "Customer retention as a competitive weapon", Directors and Boards, vol 14, no 4, 1990.
5. Reichheld, F. (1996) The Loyalty Effect, Harvard Business School Press, Boston, 1996.
6. Moloney, Chris X. (2006) "Winning Your Customer’s Loyalty: The Best Tools, Techniques and Practices" AMA Workshop Event(s). Misc. materials distributed related to event(s). San Diego, 2006.
7. Carrol, P. and Reichheld, F. (1992) "The fallacy of customer retention", Journal of Retail Banking, vol 13, no 4, 1992.
8. Scott Robinette, Vicki Lenz, Claire Brand. Emotion Marketing: The Hallmark Way of Winning Customers for Life. McGraw-Hill Professional, 2000. ISBN 0071364145

• Moloney, Chris X. (2006) "Winning Your Customer’s Loyalty: The Best Tools, Techniques and Practices" AMA Workshop Event(s). Misc. materials distributed related to event(s). San Diego, 2006

• Clive. Humby, Tim Phillips, Terry Hunt.Scoring Points: How Tesco is winning customer loyalty. 2004. ISBN 074943578X

Source: http://en.wikipedia.org/wiki/Loyalty_Marketing

Niche market

A niche market is a focused, targetable portion (subset) of a market sector.

By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. A niche market may be thought of as a narrowly defined group of potential customers.

A distinct niche market usually evolves out of a market niche, where potential demand is not met by any supply.

Such ventures are profitable because of disinterest on the part of large businesses and/or lack of awareness on the part of other small companies. The key to capitalizing on a niche market is to find or develop a market niche that has customers who are accessible, that is growing fast enough, and that is not owned by one established vendor already.

Etymology
The term "niche" was first used by ecologists to describe a species' position and use of resources within its environment. When used in business the term implies a situation or an activity perfectly suited to a person or a given type of personality. This concept has been extended from persons to products on the market. Whereas a niche in the strict sense can be a working position or an area suited to a person who occupies it, the market niche is perfectly suited for a product of human labour.

Marketing in and for niche markets
Niche marketing is the process of finding and serving profitable market segments and designing custom-made products or services for them. For big companies those market segments are often too small in order to serve them profitably as they often lack economies of scale. Niche marketers are often reliant on the loyalty business model to maintain a profitable volume of sales.

Source: http://en.wikipedia.org/wiki/Niche_market

Franchising

Franchising (from the French for honesty or freedom[1]) is a method of doing business wherein a franchisor licenses trademarks and tried and proven methods of doing business to a franchisee in exchange for a recurring payment, and usually a percentage piece of gross sales or gross profits as well as the annual fees. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor, and may indeed be required by the franchisor, which generally requires audited books, and may subject the franchisee or the outlet to periodic and surprise spot checks. Failure of such tests typically involve non-renewal or cancellation of franchise rights.

A business operated under a franchise arrangement is often called a chain store, franchise outlet, or simply franchise.

According to Financial Times, if sales by US franchise businesses were translated into national product, they would qualify as the 7th largest economy in the world.

Overview
The term "franchising" is used to describe business systems which may or may not fall into the legal definition provided above. For example, a vending machine operator may receive a franchise for a particular kind of vending machine, including a trademark and a royalty, but no method of doing business. This is called product franchising or trade name franchising.

A franchise agreement will usually specify the given territory the franchisee retains exclusive control over (the area protection), as well as the extent to which the franchisee will be supported by the franchisor (e.g. training and marketing campaigns).

Advantages
As practiced in retailing, franchising offers franchisees the advantage of starting up a new business quickly based on a proven trademark and formula of doing business, as opposed to having to build a new business and brand from scratch (often in the face of aggressive competition from franchise operators). A well run franchise would offer a turnkey business: from site selection to lease negotiation, training, mentoring and ongoing support as well as statutory requirements and troubleshooting.

After their brand and formula are carefully designed and properly executed, franchisors are able to expand rapidly across countries and continents, and can earn profits commensurate with their contribution to those societies. Additionally, the franchisor may choose to leverage the franchise to build a distribution network.

Franchisors often offer franchisees significant training, which is not available for free to individuals starting up their own business.

For some consumers, having franchises offer a consistent product or service makes life easier. They know what to expect when entering a franchised establishment. See franchise validation.

Disadvantages
For franchisees, the main disadvantage of franchising is a loss of control. While they gain the use of a system, trademarks, assistance, training, and marketing, the franchisee is required to follow the system and get approval for changes from the franchisor. For these reasons, franchisees and entrepreneurs are very different.

It can be expensive. Because of standards set by the franchisor, the franchisee often has no choice as to signage, shop fitting, uniforms etc. and may not be allowed to source less expensive alternatives. Added to that is the franchise fee and ongoing royalties and advertising contributions. The franchisee may also be contractually bound to spend money on upgrading or alterations as demanded by the franchisor from time to time.

In response to the soaring popularity of franchising, an increasing number of communities are taking steps to limit these chain businesses and reduce displacement of independent businesses through limits on "formula businesses."[2]

Another problem is that the franchisor/franchisee relationship can easily cause conflict if either side is incompetent (or not acting in good faith). For example, an incompetent franchisee can easily damage the public's goodwill towards the franchisor's brand by providing inferior goods and services, and an incompetent franchisor can destroy its franchisees by failing to promote the brand properly or by squeezing them too aggressively for profits.

Legal aspects
In the United States, franchising falls under the jurisdiction of a number of state and federal laws. Franchisors are required by the Federal Trade Commission to have a Uniform Franchise Offering Circular "UFOC" to disclose potential franchisees about their purchase. This disclosure must take place 10 business days prior to solicitation (franchisor agrees to offer the prospective franchisee a license). Each state may require the UFOC to contain specific requirements. This means that many franchisors have a unique UFOC for each state or sometimes are able to include all state specific requirements into one document.

The Franchise Agreement is the written contract that governs the relationship between the franchisor and the franchisee. The Franchise Agreement is more specific about the terms of the relationship than the UFOC. Every Franchise Agreement is different, but they all have similar provisions.

The key clauses that most Franchise Ageements have in common are:

1. Identifying information as to franchisor.
2. Business experience of franchisor's directors and executive officers.
3. Business experience of the franchisor.
4. Litigation history.
5. Bankruptcy history.
6. Description of franchise.
7. Initial funds required to be paid by a franchisee.
8. Recurring funds required to be paid by a franchisee.
9. Affiliated persons the franchisee is required or advised to do business with by the franchisor.
10. Obligations to purchase.
11. Revenues received by the franchisor in consideration of purchases by a franchisee.
12. Financing arrangements.
13. Restriction of sales.
14. Personal participation required of the franchisee in the operation of the franchise.
15. Termination, cancellation, and renewal of the franchise.
16. Statistical information concerning the number of franchises (and company-owned outlets).
17. Site selection.
18. Training programs.
19. Public figure involvement in the franchise.
20. Financial information concerning the franchisor.
    

There is no federal registry of franchising or any federal filing requirements for information, rather, states are the primary collectors of data on franchising companies, and enforce laws and regulations regarding their spread.

In Russia, under ch. 54 of the Civil Code (passed 1996), franchise agreements are invalid unless written and registered, and franchisors cannot set standards or limits on the prices of the franchisee’s goods. Enforcement of laws and resolution of contractual disputes is a problem: Dunkin' Donuts chose to terminate its contract with Russian franchisees that were selling vodka and meat patties contrary to their contracts, rather than pursue legal remedies.

Because litigation is expensive, the majority of franchisors have inserted mandatory arbitration clauses into their agreements with their franchisees. Since 1980, the U.S. Supreme Court has dealt with cases involving direct franchisor/franchisee conflicts at least four times, and three of those cases involved a franchisee who was resisting the franchisor's motion to compel arbitration. Two of the latter cases involved large, well-known restaurant chains (Burger King and Subway); the third involved Southland Corporation, the parent of 7-Eleven.

History
Franchising dates back to at least the 1850s; Isaac Singer, who made improvements to an existing model of a sewing machine, wanted to increase the distribution of his sewing machines. His effort, though unsuccessful in the long run, was among the first franchising efforts in the U.S. A slightly later, yet much more successful, example of franchising was John S. Pemberton's franchising of Coca-Cola.[3] Early American examples include the telegraph system, which was operated by various railroad companies but controlled by Western Union[4], and exclusive agreements between automobile manufacturers and operators of local dealerships[5].

Modern franchising came to prominence with the rise of franchise-based food service establishments. This trend started as early as 1919 with quick service restaurants such as A&W Root Beer[6]. In 1935, Howard Deering Johnson teamed up with Reginald Sprague to establish the first modern restaurant franchise [7] [8]. The idea was to let independent operators use the same name, food, supplies, logo and even building design in exchange for a fee.

The growth in franchises picked up steam in the 1930s when such chains as Howard Johnson's started franchising motels[9]. The 1950s saw a boom of franchise chains in conjunction with the development of America's Interstate Highway System [10]. Fast food restaurants, diners and motel chains exploded. In regards to contemporary franchise chains, McDonalds is arguably the most successful worldwide with more restaurant units than any other franchise network.

Social franchises
In recent years, the idea of franchising has been picked up by the social enterprise sector, which hopes to simplify and expedite the process of setting up new businesses. A number of business ideas, such as soap making, wholefood retailing, aquarium maintenance, and hotel operation, have been identified as suitable for adoption by social firms employing disabled and disadvantaged people.

The most successful example is probably the CAP Märkte, a steadily growing chain of some 40 neighborhood supermarkets in Germany.

Other examples are the St. Mary's Place hotel in Edinburgh and the Hotel Tritone in Trieste.

References

1. Random House Webster's Unabridged Dictionary, 2nd Edition
2. New Rules Website
3. http://www.referenceforbusiness.com/encyclopedia/For-Gol/Franchising.html
4. http://invention.smithsonian.org/resources/fa_wu_index.aspx#series2
5. http://findarticles.com/p/articles/mi_m0FJN/is_n8_v30/ai_18728418
6. http://www.aw-drivein.com/About_Us.cfm
7. Allen, R. (1998). Foodservice’s theory of evolution: Survival of the fittest. Nation’s Restaurant News, 32(4), pp. 14 -17.
8. Howard, T. (1996). Howard Johnson: Initiator of franchised restaurants. Nation’s Restaurant News, 30 (2), pp. 85-86.
9. http://www.wdfi.org/fi/securities/franchise/history.htm
10. http://www.pubs.asce.org/ceonline/ceonline06/0606feat.html
    

Source: http://en.wikipedia.org/wiki/Franchising

Small business

A small business may be defined as a business with a small number of employees. The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States while under 50 employees in the European Union (In comparison, the American definition of mid-sized business by the number of employees is generally under 500 while 250 is for that of European Union). These businesses are normally privately owned corporations, partnerships, or sole proprietorships.

However, other methods are also used to classify small companies, such us annual sales (turnover), assets value or net profit (balance sheet), alone or in a mixed definition. This criteria is followed by the European Union, for instance (headcount, turnover and balance sheet totals).

Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, solicitors, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc. Small businesses are usually independent.

The smallest businesses, often located in private homes, are called microbusinesses (term used by international organizations such as the World Bank and the International Finance Corporation) or SoHos. The term "mom and pop business" is a common colloquial expression for a single-family operated business with few (or no) employees other than the owners. When judged by the number of employees, the American and the European definitions are the same: under 10 employees.

Advantages of small business
A small business can be started at a very low cost and on a part-time basis. Small business is also well suited to internet marketing because it can be very manageable to serve a niche, something that would have been more difficult prior to the internet revolution which began in the late 1990s.

Adapting to change is crucial in business and particularly small business; not being tied to any bureaucratic inertia, it is typically easier to respond to the marketplace quickly. Small business proprietors tend to be intimate with their customers and clients resulting in greater accountability and responsiveness.

Problems faced by small businesses
Small businesses often face a variety of problems related to their size. A frequent cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions - it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated expenses. For example, if the prospective owner thinks that he will generate $100,000 in revenues in the first year with $150,000 in start-up expenses, then he should have no less than $250,000 available. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court, under the theory of undercapitalization.

In addition to ensuring that the business has enough capital, the small business owner must also be mindful of gross margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the gross margin exceeds fixed costs. When they first start out, many small business owners underprice their products to a point where even at their maximum capacity, it would be impossible to break even. The good news is that cost controls or a price increase can often resolve this problem.

In the United States, some of the largest concerns of small business owners are insurance costs (such as liability and health), rising energy costs and taxes. In the United Kingdom and Australia, small business owners tend to be more concerned with excessive governmental red tape.

Marketing the small business
Common marketing techniques for small business include networking, word of mouth, customer referrals, yellow pages directories, television, radio, outdoor (roadside billboards), print and internet. Electronic media like TV can be quite expensive and is normally intended to create awareness of a product or service.

Many small business owners find internet marketing more affordable. Google AdWords and Yahoo! Search Marketing are two popular options of getting small business products or services in front of motivated Web searchers. Advertising on niche sites can also be effective, but with the long tail of the internet, it can be time intensive to advertise on enough sites to garner an effective reach.

Franchise businesses
Franchising is a way for small business owners to benefit from the economies of scale of the big corporation (franchisor). McDonald's restaurants are an example of a franchise. The small business owner can leverage a strong brand name and purchasing power of the larger company while keeping their own investment affordable. However, some franchisees conclude that they suffer the "worst of both worlds" feeling they are too restricted by corporate mandates and lack true independence. McDonald's has even been sued by franchisees who feel they have been exploited with unreasonable costs for materials (cups, condiments etc.) they are required to purchase from the parent company.

Mom and pop small businesses
Mom and pop businesses are small or micro businesses that are family-owned and family-operated. People who speak of mom and pop businesses often refer to the unique perspective offered by patronizing a family business. Some encourage the unknown experience of entering a mom and pop establishment over patronizing franchise businesses, which typically offer comparable stores and similar consumer experiences, regardless of location. For example, mom and pop businesses are often highlighted in travel guides, because patronizing a family-owned and operated business allows a traveler to more fully experience and understand the people of another culture.

Small business bankruptcy
When small business fails, the owner may file bankruptcy. In most cases this can be handled through a personal bankruptcy filing. Corporations can file bankruptcy, but if it is out of business and valuable corporate assets are likely to be repossessed by secured creditors there is little advantage to going to the expense of a corporate bankruptcy. Many states offer exemptions for small business assets so they can continue to operate during and after personal bankruptcy. However, corporate assets are normally not exempt, hence it may be more difficult to continue operating an incorporated business if the owner files bankruptcy.

Certification and trust
Building trust with new customers can be a difficult task for a new and establishing business. Some organizations like the Better Business Bureau and the International Charter now offer Small Business Certification, which certifies the quality of the services and goods produced and can encourage new and larger customers. These services may require a few hours of work, but a certification may reassure potential customers. However, the most effective way to earn trust is through customer referrals.

Contribution to the economy
Small Business is the major job provider in most economies. The top job provider is those with less than 10 employees, and those with 10 or more but less than 20 employees comes in as the second, and those with 20 or more but less than 50 employees comes in as the third.

Sources of funding
Small businesses use several sources available for start-up capital:

1. Self-financing by the owner through Cash, equity loan on his or her home, and or other assets.
2. Loans from friends or relatives
3. Private stock issue
4. Forming partnerships
5. Angel Investors
6. SME finance, including Collateral based lending and Venture capital, given sufficiently sound business venture plans
   

Some small businesses are further financed through credit card debt - usually a poor choice, given that the interest rate on credit cards is often several times the rate that would be paid on a line of credit or bank loan. Many owners seek a bank loan in the name of their business, however banks will usually insist on a personal guarantee by the business owner. In the United States, the Small Business Administration (SBA) runs several loan programs that may help a small business secure loans. In these programs, the SBA guarantees a portion of the loan to the issuing bank and thus relieves the bank of some of the risk of extending the loan to a small business. The SBA also requires business owners to pledge personal assets and sign as a personal guarantee for the loan.

International differences
The challenges facing small business owners vary from country to country, based on the overall business climate as well as the regulatory framework of each geographic location. It is extremely important for business owners to understand the legal requirements and obligations in their particular country of operation.

Source: http://en.wikipedia.org/wiki/Small_business

YouTube Downloader, Download your favorite youtube videos to your computer

Now you can download all your favourite youtube videos to your computer. It's never been easier to download youtube videos.

Google AdSense and Blogs

If you have a blog, or are thinking about starting a blog, then you are definitely going to want to read this article. It’s all about how to line your pockets with money that’s just waiting to be made without working much harder than you already are.

No only are blogs the hottest thing on the ‘net right now, but they are custom-made for Google’s AdSense program. Why? It’s simple. Blogs represent constantly changing and fresh content to Google’s search engine spiders. Feeding fresh content to those little spiders is just like tossing raw meat to a tiger. They just gobble it up. The more pages of your blog that get indexed, the more traffic you get. And the more traffic you get, the more exposure your AdSense ads get. Are you beginning to see where I’m heading here?

It’s not just Google that loves new content, all of the major engines do. In fact, some web-savvy bloggers are testing Google ads on one page and Overture ads on the other. It doesn’t take too long to see which ads are doing the best when you have nearly side-by-side comparison statistics to look at. Just don’t make the mistake of putting Google and Overture ads on the same page together. While they won’t kill each other like a pair of Siamese fighting fish in the same bowel will, you will be violating both sites’ Terms of Service, and it isn’t worth killing the goose (geese) that laid the golden egg.

It’s a snap to set up Google AdSense ads on your blog. Everything you need to know is right inside of the Google control panel. What’s not so easy is figuring out what ads are going to appear on each page. Since Google targets your key words, and your blog articles could possible wander towards any subject, you never know what you’re going to get.

Well, “never” is a strong word because there actually IS a way to pre-test your blog’s ads before you post your newest edition. Here’s what you do:

• Write your blog article like you normally would
• Plug in your AdSense code and then post your newest page to a sub directory that’s not part of your blog.
• Click refresh a few times until Google wakes up and starts sending ads.
• If you don’t like what you see then fine-tune the article until you see the types of ads that you’re looking for.
• With some ads paying as much as $5 per click or more, I’d certainly spend an extra 30 minutes or so tweaking my blog. That’s for sure.

If you’re working hard to get your blog in front of visiting eyeballs, then it doesn’t make any sense at NOT to be using Google AdSense to draw every penny out of your site that’s possible. OK, that’s the end of the article. Now get busy tweaking your blog and checking your ads. You’ve got money waiting to be made!


by: Diane Nassy

Why Not to Start Using CGI Proxy Sites?

CGI Proxy sites work by very quickly and effectively relaying web page request for users to web sites and back. The CGI Proxy script relays your information without ever revealing exactly who you are. So you are anonymous to the web site you are visiting. This is done in a near seamless manor with the user only seeing a small advertising bar on top of the page. This information is going in both directions with the web site server talking to the server hosting the CGI proxy site. The website server does not know your location (IP address), browser type, language settings, cannot set cookies on your computer and Javascripts may be restricted.

What most users do not realize is that the cgi proxy server keeps a log of all the activity including web pages visited, user names, passwords, addresses, credit card numbers or anything else a person enters in in the web pages surfed through a cgi proxy. This treasure of data is exactly what people want to hide on the Internet but by using a CGI Proxy site you have just delivered the information to the CGI Proxy site owwner.

In 99% of cases the web site being visited should be more reliable and secure than a web based cgi proxy service. For example visiting Yahoo mail from a new fast running CGI Proxy site, Yahoo is less likely to criminally use provided information collected from its websites combined with the knowledge of your location and browser type than a small website operator hosting a free CGI Proxy script. While logging into your yahoo account and not revealing your location (IP) to yahoo may sound positive, the price you pay is sharing all of your information including passwords with the CGI proxy site owner.

Credit card information, addresses, contacts or any other information entered on a web form while surfing pages through a CGI Proxy site are also available in the server logs. Don't take the unneeded risk with your personal information, DO NOT USE WEBBASED CGI PROXY SITES FOR ANONYMITY.

CGI Proxy sites do have evolved into a leading way to bypass network website filters that block specific sites. just be sure that you know the risk involved in checking your hotmail from work or looking at your myspace profile at school. This is a leading source of hijacked profiles for these sites.

By Mike Paul
Michael Paul is a web site developer who shares his insight into the working s of the web. Learn more about start using cgi proxy at http://www.cgiproxy.info

Strategic Issues facing the airline Industry

The face of aviation is gradually evolving. The long-standing problems of the industry in the form of large numbers of network carriers and substantial over-capacity in many markets were exacerbated by the events of September 11th. This is likely to pave the way for some acceleration in the process of airline restructuring and consolidation. Experts believe that there is not room for the current multitude of carriers in Europe, and that these will eventually be whittled down to three or four major airlines, with the others absorbed or restructured to focus more on regional traffic. This also represents an opportunity for 'no-frills' carriers to increase their market share. Along with this, some restructuring of the industry’s complex and outdated regulatory system will be required.

In the longer term, trend growth may itself slow gradually as the big air travel markets mature. In addition, falling yields, which have boosted air travel growth in the past, cannot be relied upon to persist, at least at the rate they have for the past decade or so. If cost trends are less favourable - for example because of increasing fuel costs, congestion and other environmental restrictions, as well as the prospect of higher security and insurance costs to reflect the risks of terrorism - the scope for lower yields would be less, and this might reduce future growth trends. A key issue will be the extent to which favourable cost trends - such as the impact of the Internet on distribution costs and cost synergies from industry consolidation - can offset these upward pressures on prices and costs.

The full-service airlines, saddled with big networks and strongly unionised workforces, cannot easily embrace the management strategies of the no-frills airlines. Moreover, their scope for defensive mergers is limited by competition policy. The ability of international airlines to expand is limited by ownership restrictions (In the US foreigners cannot own more than 25% of a national airline, in the EU the restriction is 49%).

The “no-frills” market within Europe is immature relative to that of the US. The sector accounts for only around 5% of all intra - European capacity, though the share is much higher in the UK domestic market and on services between the UK and Europe, closer to 20%. Further strong growth is expected over the next 2-3 years as new operations start up, and new destinations are added to the existing carriers’ networks.

However as the UK market becomes saturated, these carriers are likely to focus their development at continental European hubs. The experience of the US market suggests that deregulation will be followed by industry consolidation. So far there has been limited progress in this direction but many are viewing the current crisis as the catalyst necessary to completely restructure the European airline industry. In the US the industry has consolidated into seven major carriers, which carry over 80% of passenger traffic of US airlines. Europe is far more fragmented with the equivalent figure for the seven European majors at only 47%.

EasyJet CRM
"Come on, Let’s Fly"
Low-budget airline, EasyJet is using customer-relationship-management (CRM) software from RightNow technologies to improve its online services and reduce unnecessarily spending running costs by an estimated £750,000. The service is already deployed across the company’s seven European websites and features a knowledge base that refines and grows the more it is used, allowing easy and timelier access to booking information.

The CRM service module enables the 1.5 million people who visit the company’s website each week to carry out end-to-end transactions while they are online, without any intervention from customer service agents. It responds to natural language text and keyword searches, using artificial intelligence to ensure that the details returned are accurate and relevant to the original criteria. Currently, 90 per cent of customers are resolving queries independently using the solution.

Any enquiries that cannot be resolved through the system can be escalated to customer service agents, who have access to the resources contained in the knowledge base via e-mail. When a new question is raised, the agent can upload the answer, potentially saving time on future transactions. Already, customer e-mail enquiries have reduced by 40 per cent, allowing agents time to concentrate on more complex issues.

Solution
An Operations Data Warehouse was developed, based on Microsoft SQL Server 2000, and using Visual Basic to develop a custom ETL (Extract Transform Load) process to migrate data from the various operational systems automatically. The data was re-organised and re-formatted at the same time.
A range of reporting tools was developed based around MS Office and with integration in Visual Basic. These range from on-demand ad hoc reports, OLAP (On Line Analytical Processing) tools for data mining, together with automated, regular reports which are automatically distributed to a management audience.
The result is an orderly, accurate and efficient reporting system which presents information in a consistent manner, using familiar tools and interfaces, in precisely the desired format, and requiring minimal user intervention.

The Challenges
The operations systems are "Mission Critical": a key challenge was to extract the large volumes of necessary data without disruption, yet with a good enough reliability to ensure that vital reports were delivered on time each day.
Operations systems often depended on obscure data formats and database technologies, to ensure accuracy and data integrity involve a degree of "reverse engineering" to understand how these functioned prior to development.

easyJet’s Future
easyJet has to consider whether it should respond to new entrants by ceding niche-segments or by competing aggressively on price, routes and service in an attempt to drive the entrant out of the market. To make the strategic decision market research on the size of different combinations of pricing and service is needed. easyJet also needs to know how much it costs the competitor to serve, and how much capacity the competitor has for, every route in question.

Finally, the new entrant’s competitive objectives are of relevance to anticipate how it would respond to any strategic moves easyJet might make. By obtaining these information residual uncertainty would be limited, and the incumbent airline would be able to build a confident business case around its strategy. It is advisable that easyJet targets mainly leisure travellers as business often demand frequent flights to a wide range of destinations, seek quality service and frequent flyer programmes, and are willing to pay a premium for these benefits. Also, trying to appeal to widely different customer needs runs counter to the overall trend in service industries, in which distinctive approaches, tailored to different customers, have generally come to dominate. No real opportunity offers the long-haul business as it is very different, both technically and in customer needs, to short-haul travel. easyJet should continue to focus on price and attempt to connect the dots in its network, which cost less than opening new cities.

Thereby, it needs to make sure that a growth in its network and fleet does not lead to higher operating costs. It should also consider putting more emphasis on direct marketing by e.g. introducing a customer retention scheme. To differentiate its brand further on promotional lines, easyJet could introduce a CRM (cause related marketing) scheme, developing a reputation for being a ‘caring airline’, e.g. by selling shares in forest help programmes over its website, collecting foreign currency on flights for charity etc., thereby giving its passengers ‘a sense of psychological comfort and well-being’ when they choose to fly with easyJet. Overall, easyJet has to develop a realistic and accurate assessment of the market-niche to be served. A relentless commitment to quality service and cost control is as important as the discipline to establish a growth plan (see www.easyJet.com for easyJet product life cycle and marketing strategy).


Strategic Issues facing the airline Industry

US

• American Trans Air Temporary layoff of 1,500 workers; cuts service by 20%
• America West Sheds 2,000 jobs; cuts services by 20 %
• Continental Airlines Sheds 12,000 jobs; cuts schedules, postpones ExpressJet unit float
• Delta Air Lines Cuts service by 20 %
• N West Airlines Cuts service by 20 %; reviews possibility of job cuts
• US Airways Cuts 11,000 jobs and flight schedule by 23 %
• United Airlines Cuts worldwide flight schedule by 20%

UK

• British Airways Cuts jobs and transatlantic flights
• Virgin Atlantic Cuts 1,200 jobs; grounds five aircraft, cuts transatlantic flights by 20%

Ireland

• Aer Lingus Cuts operations by at least 25%

Canada

• Air Canada Cuts flights to US by 20 %

France

• Air France Hiring freeze; retires 17 aircraft from service. Cutting costs not linked to safety or service quality

Spain

• Iberia Sales down 30%; may report net loss in 2001

Netherlands

• KLM Expects 2001 operating loss

Germany

• Lufthansa Expected to cut 2001 operating profit by more than €250m (£156m)

Sweden

• SAS Expects "significantly negative" effect; will make capacity cuts

Korea

• Korean Air Lines Expects losses of 20bn won (£10m)

References

1. Problems faced by the world’s biggest airlines after September 11th , 2001 (source: Clark, A. (2001)
2. www.ba.com
3. Courtney, Kirkland and Viguerie (1999) ‘Strategy under Uncertainty’, in Harvard Business Review on Managing Uncertainty, Boston MA: Harvard Business School Publishing: p8, 19p.
4. Costa, P.R. et. al (2002) “Rethinking the aviation industry”, The McKinsey Quarterly, Mid-summer 2002, p89, 12p
5. Pringle, H. and M. Thompson (2001) “Brand Spirit - how cause related marketing builds brands”, Chichester: Wiley, p130.
6. Clark, A. (20010 “Airlines face bankruptcy”, The Guardian, 20 September 2001.

PEST Analysis

PEST Analysis involves recognizing the Political, Economic, Social and Technological influences on any firm.
As a starting point you should to consider what environmental influences have been particularly important in the past, and the extent to which there are changes occurring which may make any of these more or less significant in the future for the firm and its competitors.

The following figure is used as a checklist to quick analysis of different influences.


Step 1- Weight: you should look at each of the factors and to measure how important they are to the firm on a scale of 0-1.
For instance, under political factors monopoly legislation could be important. That would depend on the nature of the business. A one-man IT business would hardly need to worry about monopolies legislation and would score it very low, while at the same time for an organisation like Microsoft monopolies legislation would be very important.

Step 2- Score: Each element is then score on a scale of 1-10. This score is dependent on the probability of change. If there is a high probability then a high score should be given and if there is a low probability then a low score should be given

Step 3 - Weighted Score: This is obtained by multiplying the weight from step 1 and the score from step 2. The element that has the highest weighted score is the one that would affect the organization the most.

SWOT Analysis

SWOT Analysis, or sometimes known as the TOWS Matrix, is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture or in any other situation of an organization or individual requiring a decision in pursuit of an objective. It involves monitoring the marketing environment internal and external to the organization or individual. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from the Fortune 500 companies.

Strategic and Creative Use of SWOT Analysis
Strategic Use: Orienting SWOTs to An Objective. If SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being useless. A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic planning technique that incorporates an objective-driven SWOT analysis is SCAN analysis. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research.

If a clear objective has been identified, SWOT analysis can be used to help in the pursuit of that objective. In this case, SWOTs are:

1. Strengths: attributes of the organization that are helpful to achieving the objective.
2. Weaknesses: attributes of the organization that are harmful to achieving the objective.
3. Opportunities: external conditions that are helpful to achieving the objective.
4. Threats: external conditions that are harmful to achieving the objective.

Correct identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective are to be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.

Creative Use of SWOTs. If, on the other hand, the objective seems attainable, the SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering each of the following four questions, many times:

1. How can we Use each Strength?
2. How can we Stop each Weakness?
3. How can we Exploit each Opportunity?
4. How can we Defend against each Threat?

Ideally a cross-functional team or a task force that represents a broad range of perspectives should carry out the SWOT analysis. For example, a SWOT team may include an accountant, a salesperson, an executive manager, an engineer, and an ombudsman.

Internal and external factors
The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories:

Internal factors - The strengths and weaknesses internal to the organization.
External factors - The opportunities and threats presented by the external environment.

The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is really important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats.

It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

Examples of SWOTs

Strengths and weaknesses

• Resources: financial, intellectual, location
• Customer service
• Efficiency
• Infrastructure
• Quality
• Staff
• Management
• Price
• Delivery time
• Cost
• Capacity
• Relationships with customers
• Brand strength
• Local language knowledge
• Ethics
• Principles

Opportunities and threats

• Political/Legal
• Market Trends
• Economic condition
• Expectations of stakeholders
• Technology
• Public expectations
• Competitors and competitive actions
• Bad PR
• Criticism (Editorial)
• Global Markets

Errors to be avoided
The following errors have been observed in published accounts of SWOT analysis:

1. Conducting a SWOT analysis before defining and agreeing upon an objective (a desired end state). SWOTs should not exist in the abstract. They can exist only with reference to an objective. If the desired end state is not openly defined and agreed upon, the participants may have different end states in mind and the results will be ineffective.
2. Opportunities external to the company are often confused with strengths internal to the company. They should be kept separate.
3. SWOTs are sometimes confused with possible strategies. SWOTs are descriptions of conditions, while possible strategies define actions. This error is made especially with reference to opportunity analysis. To avoid this error, it may be useful to think of opportunities as "auspicious conditions".
4. "Make your points long enough, and include enough detail, to make it plain why a particular factor is important, and why it can be considered as a strength, weakness, opportunity or threat. Include precise evidence, and cite figures, where possible.
5. Be as specific as you can about the precise nature of a firm’s strength and weakness. Do not build content with general factors like economies of scale.
6. Avoid vague, general opportunities and threats that could be put forward for just about any organisation under any circumstances.
7. Do not mistake the outcomes of strength (such as profits and market share) for strengths in their own right".
   

Additional uses of SWOT Analysis
The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit making organizations, governmental units and individuals. SWOT analysis may also be, and often is, used in pre-crisis planning and preventive crisis management. Following the steps described above should lead to clarification of issues and development of goal-oriented alternatives.

Alternative view on SWOT
SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and environmental factors. [1] It is a technique widely used by a group, department, unit, organisation or even an individual.[2] As part of Continuing Professional Development SWOT analysis can be contained within and feed into an indidviduals CPD.[3] [4]

Using SWOT to analyse the market position of a small management consultancy with specialism in HRM.[5]

Strengths	Weaknesses	Opportunities	Threats
Reputation in marketplace	Shortage of consultants at operating level rather than partner level	Well established position with a well defined market niche	Large consultancies operating at a minor level
Expertise at partner level in HRM consultancy	Unable to deal with multi-disciplinary assignments because of size or lack of ability	Identified market for consultancy in areas other than HRM	Other small consultancies looking to invade the marketplace
Track record - successful assignments	No administrative back up	Developmental opportunities for extending business into the EU	Limited financial resources

A SWOT carried out on a HR Department may look like this:

Strengths	Weaknesses	Opportunities	Threats
Developed techniques for dealing with major areas of HR, job evaluation, psychometric testing and basic training	Reactive rather than pro-active; needs to be asked rather than developing unsolicited ideas	New management team, wanting to improve overall organizational effectiveness through organizational development and cultural management programmes	HR contribution not recognised by top management who by-pass it by employing external consultants

A SWOT carried by an individual manager could look like this:

Strengths	Weaknesses	Opportunities	Threats
Enthusiasm, energy, imagination, expertise in subject area, excellent track record in specialized area	Not good at achieving results through undirected use of personal energies, trouble at expressing themselves orally and on paper – may have ideas but these come over as incoherent, management experience and expertise limited	More general management opportunities requiring development of new managers	De-centralisation having the effect of removing departments where the individual is employed and eliminating middle management layers to form flatter structure of organization

SWOT within corporate planning
As part of the development of strategies and plans to enable the organisation to achieve its objectives, then that organisation will use a systematic/rigorous process known as corporate planning.

• Set objectives – defining what the organisation is intending to do
• Environmental scanning: Internal appraisals of the organisations SWOT, this needs to include an assessment of the present situation as well as a portfolio of products/services and an analyse of the product/service life cycle
• Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors
• Strategic Issues defined – key factors in the development of a corporate plan which needs to be addressed by the organisation
• Develop new/revised strategies – revised analysis of strategic issues may mean the objectives need to change
• Establish critical success factors – the achievement of objectives and strategy implementation
• Preparation of operational, resource, projects plans for strategy implementation
• Monitoring results – mapping against plans, taking corrective action which may mean amending objectives/strategies.[6]
  

Using SWOT in marketing
In Competitor analysis, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors.

Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. As such, they often conduct market research (alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include:

• Qualitative marketing research, such as focus groups
• Quantitative marketing research, such as statistical surveys
• Experimental techniques such as test markets
• Observational techniques such as ethnographic (on-site) observation
• Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis.

References

1. Armstrong. M. A handbook of Human Resource Management Practice (10th edition) 2006, Kogan Page , London ISBN 0-7494-4631-5
2. Boydell. T. and Leary. M. Identifying Training Needs, 2001 Chartered Institute of Personnel & Development, London ISBN 0-85292-630-8
3. Chartered Management Institute (About the CPD scheme) (CMI website accessed 19/03/2007)
4. Institute of Administrative Management website (accessed 16/03/2007)
5. Armstrong.M Management Processes and Functions, 1996, London CIPD ISBN 0-85292-438-0
6. Armstrong.M Management Processes and Functions, 1996, London CIPD ISBN 0-85292-438-0

Source: http://en.wikipedia.org/wiki/SWOT_Analysis