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EE8061 INNOVATION AND TECHNOLOGY MANAGEMENT

CLASS DISCUSISON 4
1. What is viral marketing? What are effective viral marketing strategies.
Provide an example of a startup using viral marketing to promote and sell
their product or service.
The buzzwords viral marketing and viral advertising refer to marketing
techniques that use pre-existing social networks to produce increases in brand
awareness or to achieve other marketing objectives (such as product sales)
through self-replicating viral processes, analogous to the spread of pathological
and computer viruses.
It can be word-of-mouth delivered or enhanced by the network effects of the
Internet.
Viral promotions may take the form of video clips, interactive Flash games, e-
books, brand-able software, images, or even text messages.
The goal of marketers interested in creating successful viral marketing
programs is to identify individuals with high Social Networking Potential (SNP)
and create Viral Messages that appeal to this segment of the population and
have a high probability of being taken by another competitor.
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The Ponzi schemes and related investment Pyramid schemes, are early
examples of viral marketing. In each round, investors are paid interest from
the principal deposits of later investors. Early investors are so enthusiastic
that they recruit their friends resulting in exponential growth until the pool of
available investors is tapped out and the scheme collapses.
Viral marketing describes any strategy that encourages individuals to pass
on a marketing message to others, creating the potential for exponential
growth in the message's exposure and influence. Like viruses, such
strategies take advantage of rapid multiplication to explode the message to
thousands, to millions.
Off the Internet, viral marketing has been referred to as "word-of-mouth,"
"creating a buzz," "leveraging the media, "network marketing." But on the
Internet, for better or worse, it's called "viral marketing."
Social Networks are good example of viral marketing. Social networks by
their nature encourage members to market the service to their friends to
create a larger social network of friends.
In the case of most social networks, advertising is the key source of
revenue. The more eyeballs, the higher the revenues.
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The classic example of viral marketing is Hotmail.com, one of
the first free Web-based e-mail services.
The strategy is simple:
Give away free e-mail addresses and services,
Attach a simple tag at the bottom of every free message sent
out: "Get your private, free email at http://www.hotmail.com"
Then stand back:
While people e-mail to their own network of friends and
associates,
Who see the message,
Sign up for their own free e-mail service, and then
Propel the message still wider to their own ever-increasing
circles of friends and associates.
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A viral marketing strategy need not contain ALL these
elements, but the more elements it embraces, the more
powerful the results are likely to be.
An effective viral marketing strategy:
Gives away products or services
Provides for effortless transfer to others
Scales easily from small to very large
Exploits common motivations and behaviours
Utilizes existing communication networks
Takes advantage of others resources

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2. Powerful brands are built on innovativeness and advertising. Examine
the brand value for Apple and Merck and describe the reasons for
their brand power.
Branding is more than just a business buzzword. It has become the crux of
selling in the new economy. If the old marketing mantra was," Nothing
happens until somebody sells something," the new philosophy could be
"Nothing happens until somebody brands something."
A brand represents many more intangible aspects of a product or service: a
collection of feelings and perceptions about quality, image, lifestyle and
status.
It creates in the mind of customers and prospects the perception that there is
no product or service on the market that is quite like yours.
In short, a brand offers the customer a guarantee and then delivers on it.
Merck made similar strides as a brand in the pharmaceutical field.
Building upon the Merck Manuals commitment to further medicine by
providing information that is current, concise, and complete, Merck brought
this philosophy to field of therapeutics and with its innovativeness in
research was able to bring high impact, high profile drugs, such as penicillin,
to market.
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Much has been written about Apples brand and the loyalty of its
customer base. Focus on great products has continued to encourage
this brand strength as Apple slowly extended beyond the personal
computer market.
Apple was rated the 20th best global brand across a variety of
industries according to 2009 Inter brand report.
In 2016, Apple was rated as no 1 creating a brand value of $170.2
billions
Most report suggested that Apple's improved ranking was caused by
record high iPod, ipad sales that saw the Touch's sales double, and all-
time high market share for Mac OS software.
The ranking was also furthered by the quick response to cost-
conscious consumers with the release of lower prices for the iPhone
and the voice-activated iPod shuffle.
Successful branding programs begin with superior products and
services, backed by excellent customer service that permeates an
entire organization.
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WORLDS TOP 10 BRANDS IN 2009
1. Coca-Cola 68,734 ($m)
2. IBM 60,211 ($m)
3. Microsoft 56,647 ($m)
4. GE 47,777 ($m)
5. Nokia 34,864 ($m)
6. McDonald's 32,275 ($m)
7. Google 31,980 ($m)
8. Toyota 31,330 ($m)
9. Intel 30,636 ($m)
10.Disney 28,447 ($m)

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WORLDS TOP BRANDS IN 2015

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WORLDS TOP BRANDS IN 2016

WORLDS TOP BRANDS IN 2017

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3. Mr. Smith knows his talented people are the reason for the
success of his company. Smith has noticed that the costs of
medical and dental benefits are escalating, and he needs to control
them. With 800 employees, the firms profitability is threatened. He
has three options: 1) eliminate health benefits, 2) try to find a
cheaper plan that covers fewer medical and dental procedures, or
3) withhold a fixed amount of each persons salary to use to fund
the benefits. Which would you recommend he choose?
Critical to making this decision will be Smiths ability to communicate
with his employees, both in terms of explaining his decision to the 800
workers as well as gathering feedback and perspectives from the team
members.
Eliminating health benefits altogether would likely not be a wise decision
in the long run, as a certain percentage of talented staff would no doubt
be frustrated with the firm.
Options 2 or 3 are more reasonable solutions; while the final decision
needs to be made by Smith, input from the team will be a critical
ingredient in making the right decision.
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4. The Internet is useful as a medium for customers purchasing
music and books, but less useful for purchasing groceries.
Describe why this is the case.
There are a number of reasons that can be identified with Grocery
shopping failure.
Perishable items by definition require a significant distribution
channel to ensure the goods arrive fresh to the customer.
Any requirement of delivery infrastructure makes the business
case challenging.
Amazon and other web retailers leverage the non-perishable
nature of books and CDs and leverage the distribution networks of
FedEx and UPS.
Grocery shopping for many fresh items is driven by the senses
(i.e. the color, feel, smell, etc. of the items).
Fruits and vegetables are not all created equal, and this diversity
cannot be demonstrated for each item on the web.
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ONLINE GROCERY
What could be easier than ordering all your groceries online and having them
delivered to your doorstep at a time of your choice .
No more driving
No more wasting your time and gas
No more waiting at the check-out lines
USA

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KOREA
Homeplus virtual store in South Korea came up with a innovative idea.
The decision was made after market survey revealed that many consumers
concentrated on journeys to and from work without having time to do grocery
shopping.
The company designed big screens that looked exactly like physical store shelf
where users could use their Smartphones to scan the QR codes and put the
products in their shopping cart.

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China
In 2016 China ecommerce market become the largest in the world.
Chinas e-commerce market (excluding travel and other events ticketing) in
2016 was $752 billions.
Chinas share in global e-commerce in 2015 was 40%.
Online grocery sales in China rose nearly 50 percent in 2014.
46% of Chinese consumers ordered groceries online in 2015 (10% in USA).
Online grocery shopping is taking off in China in part because members of
Chinas rising middle-classmany still without cars and living in densely
populated citiesare more accustomed to rapid social change and more
willing to try new shopping behaviors such as buying groceries online for
home delivery.
India
The food and grocery industry in India is currently worth $383 billion, and is
slated to touch $1 trillion by 2020.
However the online grocery market is estimated to be less than $100 million
at present, and is expected to cross $25 billion by 2020.
Competition (physical store), Infrastructure, logistics are some hindrances.
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E-commerce in India

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E-commerce in Singapore

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10 REASONS WHY ONLINE GROCERY SHOPPING IS FAILING
During the first dot-com boom, online grocery shopping was supposed to
be the next big thing. Indeed many companies failed.
Years later, there was a resurgence of interest in this service, but history
repeated itself. Why does online grocery shopping continue to fail? Here
are some reasons why.
1. GROCERY SHOPPING IS A SOCIAL EXPERIENCE
Families go to the grocery store together to browse the aisles and plan
their next week's meals.
None of these activities are feasible with the online shopping
experience.
2. PURCHASING PRODUCE IS A TACTILE PROCESS
Shopping for fruits and vegetables online would be as useful as picking
out paint colors over the phone.
Internet grocers couldn't possibly spend the time and money necessary
to take a picture of each actual piece of fruit, but even if they did, you
couldn't hold it, shake it, smell it or tap it to determine its quality.

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3. FISH AND MEAT ARE BEST PURCHASED BY SIGHT
When buying a steak, shoppers want to see the cut they are getting.
They can determine freshness from the color and the odor.
Once again, online pictures, even if feasible, can't communicate the
nuances a customer is looking for in a nice cut of meat or piece of fresh
fish.
4. FRESHNESS MATTERS
Local supermarkets bake bread each afternoon so that shoppers can
return home with a fresh loaf.
Shoppers rush home to ensure their ice cream won't melt and their
lettuce doesn't wilt.
Grocery delivery requires that you stick to a schedule in order to be
there when your food arrives.
If you can't immediately cool your ice cream or lettuces, this all-
important freshness is lost.
What is supposed to be a convenient service becomes an
inconvenience for many who would rather maintain a flexible schedule.
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5. THE RIGHT TECHNOLOGY HASN'T YET BEEN APPLIED
We can envision a day when supermarket websites show virtual
products on shelves that can be visually browsed.
But so far, no store has created a more innovative interface than your
typical web merchant.
Until a grocer makes shopping online faster and easier than browsing
the aisles, people will continue to visit the supermarket instead of
ordering online.
6. GROCERY SHOPPERS DO NOT USE RECURRING LISTS
Online grocers tout the ability to let customers create a list of items to
be purchased on a recurring basis.
But that is just not how most people shop.
People like to try new things based on the current prices, their
changing appetites or just on a whim rather than order the same food
over and over again.

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7. NO COST ADVANTAGE
The premise behind internet grocers was that shoppers would pay more
money for goods delivered to their door. However, the opposite is true.
Most shoppers will only order groceries online when they can be assured of
saving money. Amazon and other web retailers cut consumer costs by
centralizing their products in out-of-state warehouses. This way, they can use
national shipping infrastructures, minimize their locations and save
consumers the sales tax.
In contrast, an internet grocer must have a warehouse in every metro area
along with their own fleet of specialized delivery vehicles, all while charging
the same sales tax as a competing supermarket. Due to these expenses,
grocery delivery services could cost more than food purchased at a local
supermarket.
8. CONSUMERS DISLIKE DELIVERY TIME WINDOWS
The last thing anyone wants to do is replace their spontaneous supermarket
shopping experience with an ordeal similar to waiting for their cable television
service to be installed.
Most would much rather make a quick stop at their grocer on the way home
from work than be forced to stay home between the hours of 3pm and 5pm in
order to meet a delivery truck.
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9. SUPERMARKETS ARE ABOUT MUCH MORE THAN JUST FOOD
When visiting a typical supermarket, it is hard not to notice that less than
half the space is occupied by actual food. Supermarkets offer flowers,
balloons, greeting cards, event tickets, magazines, books, movie rentals
and much more. Other services often located inside or adjacent to a
supermarket include banks, photo printers, coffee shops, liquor stores and
dry cleaners.
10. SPEED MATTERS
In Europe, shoppers typically purchase ingredients for their meals the day
they prepare them. While this is a less common practice in the United
States, customers often do shop for food at the last minute. This is why
grocery stores are always open on Thanksgiving Day. Since the use of a
grocery delivery service requires advance planning, it can't accommodate
impulse purchases.
THE BOTTOM LINE
When a new technology is invented, the road to mass acceptance is not
always a smooth one. Given both the promise and pitfalls, it remains to be
seen whether online grocery shopping will become as widely accepted as
mobile phone technology, or if it will remain a niche curiosity. Until then,
there will always be a grocery store in every town.
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According to recent research analyst Mintel, 45% of consumers fail to
see the benefit of online shopping and 56% said they had never
shopped online for food.
One in three said they shopped online however just over 10% of
respondents said they did so on a regular basis.
Online shopping is least popular with the over-55s with 55% of them
opposed to it and preferring to top-up shop.
According to Mintel, many consumers prefer to shop in-store as they
believe retailers will deliver food that is close to its sell-by date.
Additionally 83% like to examine fresh food before they buy.
One in five consumers has tried online shopping for food, but has been
put off by it being cumbersome or time-consuming.
"Improving site usability by making browsing and searching easier and
enabling greater personalisation could be key in combating this.
"However, it is the delivery charge and need for top-up shopping in-store
which seems to put off occasional users.
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