What is micromarketing?

Influences on attitudes formation?

SOURCES OF INFLUENCES ON ATTITUDE FORMATION:The formation of consumer attitudes is strongly influenced by persona/experience, the influence of family and friends, direct marketing, and mass media. The primary means by which attitudes toward goods and services are formed is through the consumer's direct experience in trying and evaluating, them). Recognizing the importance of direct experience, marketers frequently attempt to stimulate trial of new products by offering cents-off coupons or even free samples.the marketer's objective is to get consumers to try the product and then to evaluate it. If a product proves to be to their liking, then it is probable that consumers will form a positive attitude and be likely to repurchase the product. In addition, from the information on the coupon (e.g., name and address) the marketer is able to create a database of interested consumers.Marketers are increasingly using highly focused direct-marketing programs to target small consumer niches with products and services that fit their interests and lifestyles.(Niche marketing is sometimes called micromarketing.) Marketers very carefully target customers on the basis of their demographic, psychographic, or geo-demographic profiles with highly personalized product offerings (e.g., hunting rifles for left-handed people) and messages that show they understand their special needs and desires. Direct-marketing efforts have an excellent chance of favorably influencing target consumers' attitudes. Because the products and services offered and the promotional messages conveyed are very carefully designed to address the individual segment's needs and concerns and, thus are able to achieve.Attitudes that develop through direct experience (e.g., product usage) tend to be more confidently held, more enduring, and more resistant to attack than those developed via indirect experience (e.g., reading a print ad).Personality Factors:Personality plays a critical role in attitude formation. For example, individuals with a high need for cognition (i.e., those who crave information and enjoy thinking) are likely to form positive attitudes in response to ads or direct mail that are rich in product-related information while consumers who are relatively low in need for cognition are more likely to form positive attitudes in response to ads that feature an attractive model or well-known celebrity. In a similar fashion, attitudes toward new products and new consumption situations are strongly influenced by specific personality characteristics of consumers.Strategies of Attitude Change:Attitude changes are learned; they are influenced by personal experience and other sources of information,and personality affects both the receptivity and the speed with which attitudes are likely to be altered. Altering consumer attitudes is-a key strategy consideration for most marketers.For marketers who are fortunate enough to be market leaders and to enjoy a significant amount of customer goodwill and loyalty, the overriding goal is to fortify the existing positive attitudes of customers so that they will not succumb to competitors' special offers and other inducements designed to win them over. Most competitors; take aim at the market leaders when developing their marketing strategies. Their objective is to change the attitudes of the market leaders' customers and win them lover. Among the attitude-change strategies that are available to them are (1) changing the consumer's basic motivational function, (2) associating the product with an admired group or event, (3) resolving two conflicting attitudes, (4) altering components of the Multiattribute model, and (5) changing consumer beliefs about competitors' brands.Changing the Basic Motivational Function:An effective strategy for changing consumer attitudes toward a product or brand is to make particular needs prominent. One method for changing motivation is known as the functional approach.21 According to this approach, attitudes can be classified in terms of four functions: the utilitarian function, the ego-defensive function, the value-expressive function, and the knowledge function.The Utilitarian Function:We hold certain brand attitudes partly because of a brand's utility. When a product has been useful or helped us in the past, our attitude toward it tends to be favorable. One way of changing attitudes in favor of a product is by showing people that it can serve a utilitarian purpose that they may not have considered. For example, the ad for Clorox Disinfecting Spray points out that this product will work for 24 hours, whereas its competitor, Lysol, does not.The Ego-Defensive Function:Most people want: to protect-their self-images from inner feelings of doubt they want to replace their uncertainty with a sense of security and personal confidence. Ads for cosmetics and personal care products, by acknowledging this need, increase both their relevance to the consumer and the likelihood of a favorable attitude change by offering reassurance to the consumer's self-concept. For example, the ad for Suave Performance Series Anti-Perspirant stresses in its headline In a 24-7 World, Your Anti-Perspirant Does not Get To Knock Off Early.The Value-Expressive Function:Attitudes are an expression or reflection of the consumer's general values, life styles, and outlook. If a consumer segment generally holds a positive attitude toward owning the latest personal communications devices (e.g., owning the smallest cellular telephone), then their attitudes toward new electronic devices are likely to reflect that orientation. Thus by knowing target consumers' attitudes, marketers can better anticipate their values, lifestyle, or outlook an can reflect these characteristics in their advertising and direct marketing efforts.The Knowledge Function:Individuals generally have a strong need to know and understand the people and things they encounter. The consumer's "need to know," a cognitive need, is important to marketers concerned with product positioning. Indeed, many product and brand positioning are attempts to satisfy the need to know and to improve the consumer's attitudes toward the brand by emphasizing its advantages over competitive brands.An ad for Celestial Seasonings that point out that Green Tea is loaded with antioxidants, which are good for you. It supports its claims with some evidence (the bar graph) and an incentive (a cents-off coupon). An important characteristic of the advertising is its appeal to consumers' need to know.Combining Several Functions:Different consumers may like or dislike the same product or service for different reasons, a functional framework for examining attitudes can be very useful. For instance, three consumers may all have positive attitudes toward Suave hair care products. However, one may be responding solely to the fact that the products work well (the utilitarian function); the second may have the inner confidence to agree with the point "When you know beautiful hair doesn't have to cost a fortune" (an ego-defensive function).The third consumer's favorable attitudes might reflect the realization that Suave has for many years stressed value (equal or better products for less) - the knowledge function.Associating the product with a special Group, Event, or Cause:Attitudes are related, at least in part, to certain groups, social events, or causes. It is possible to alter attitudes toward products, services, and brands by pointing out their relationships to particular social groups, events, or causes.Companies regularly include mention in their advertising of the civic and public acts that they sponsor to let the public know about the good that they are trying to do. For instance, Foigers@ coffee sponsors a program "Wakin' up the Music," which supports a music appreciation program for youngsters in grades K-3, created by the GRAMMY@ Foundation. Similarly, Crest sponsors a program that promotes good oral care to children through the Boys and Girls Clubs of America.Resolving Two Conflicting Attitudes:Attitude-change strategies can sometimes resolve actual or potential conflict between two attitudes. Specifically, if consumers can be made to see that their negative attitude toward a product, a specific brand, or its attributes is really not in conflict with another attitude, they may be induced to change their evaluation of the brand (i.e., moving from negative to positive).Altering Components of the Multiattribute Model:The Multiattribute attitude models have implications for attitude-change strategies; specially, they provide us with additional insights as to how to bring about attitude change: (1) Changing the relative evaluation of attributes, (2) Changing brand Beliefs, (3) Adding an attribute, and (4) Changing the overall brand rating.Changing the Relative Evaluation of Attributes:The overall market for many product categories is often set out so that different consumer segments are offered different brands with different features or benefits. In general, when a product category is naturally divided according to distinct product features or benefits that appeal to a particular segment of consumers, marketers usually have an opportunity to persuade consumers to "cross over," that is, to persuade consumers who prefer one version of the product (e.g., a standard "soft" contact lens) to shift their favorable attitudes toward another version of the product (e.g., a disposable contact lens), and possibly vice versa.Changing Brand Beliefs:It is a cognitive-oriented strategy for challenging attitudes concentrates on changing beliefs or perceptions about the brand itself. This is by far the most common form of advertising appeal. Advertisers constantly are reminding us that their product has "more" or is "better" or "best" in terms of some important product attribute.Within the context of brand beliefs, there are forces working to stop or slow, down attitude change. For instance, customers frequently resist evidence that challenges a strongly held attitude or belief and tend to interpret any ambiguous information in ways that reinforce their preexisting attitudes.24Therefore, information suggesting a change in attitude needs to be compelling and repeated enough to overcome the natural resistance to letting go of established attitudes.Adding an Attribute:A cognitive strategy consists of adding an attribute.This can be accomplished either .by adding an attribute that previously has been ignored or one that represents an improvement or technological innovation. The first route, adding a previously ignored attribute, is illustrated by the point that yogurt has more potassium than a banana (a fruit associated with a high quantity of potassium). For consumers interested in increasing their intake of potassium, the comparison of yogurt and bananas has the power of enhancing their attitudes toward yogurt. The second route of adding an attribute that reflects an actual product change or technological innovation is easier to accomplish than stressing a previously ignored attribute. Sometimes eliminating a characteristic or feature has the same enhancing outcome as adding a characteristics or attribute.Changing the Overall Brand Rating:It is a cognitive-oriented strategy consists of attempting to alter consumers' overall assessment of the brand directly, without attempting to improve or change their evaluation of any single brand attitude. Such a strategy frequently relies on some form of global statement that "this is the largest-selling brand" or "the one all others try to imitate", or a similar claim that sets the brand from all its competitors.Changing Beliefs about Competitors' Brands:Another approach to attitude-change strategy involves changing consumer beliefs about the attributes of competitive brands or product categories. In general, this strategy must be used with caution. Comparative advertising can boomerang by giving visibility to competing brands and claims. For instance, an ad for Advil makes a dramatic assertion of product superiority over Aspirin and Tylenol and that two Advil work better than Extra Strength Tylenol. Clearly, the purpose of this ad is to create the attitude that the Oracle Small Business Suite is a superior product to QuickBooks, a principal competitor.

How did muckrakers contribute to the rise of progressivism in the early years of 20th centurey?

increase prices, reduce production, and realise positive economic profits. Supply curve: in a perfectly competitive market there is a well defined supply function with a one-to-one relationship between price and quantity supplied. In a monopolistic market no such supply relationship exists. A monopolist cannot trace a short-term supply curve because for a given price there is not a unique quantity supplied. As Pindyck and Rubenfeld note, a change in demand "can lead to changes in prices with no change in output, changes in output with no change in price or both". Monopolies produce where marginal revenue equals marginal costs. For a specific demand curve the supply "curve" would be the price-quantity combination at the point where marginal revenue equals marginal cost. If the demand curve shifted the marginal revenue curve would shift as well and a new equilibrium and supply "point" would be established. The locus of these points would not be a supply curve in any conventional sense.The most significant distinction between a PC company and a monopoly is that the monopoly has a downward-sloping demand curve rather than the "perceived" perfectly elastic curve of the PC company. Practically all the variations mentioned above relate to this fact. If there is a downward-sloping demand curve then by necessity there is a distinct marginal revenue curve. The implications of this fact are best made manifest with a linear demand curve. Assume that the inverse demand curve is of the form x = a − by. Then the total revenue curve is TR = ay − by2 and the marginal revenue curve is thus MR = a − 2by. From this several things are evident. First, the marginal revenue curve has the same y intercept as the inverse demand curve. Second, the slope of the marginal revenue curve is twice that of the inverse demand curve. Third, the x intercept of the marginal revenue curve is half that of the inverse demand curve. What is not quite so evident is that the marginal revenue curve is below the inverse demand curve at all points. Since all companies maximise profits by equating MR and MC it must be the case that at the profit-maximizing quantity MR and MC are less than price, which further implies that a monopoly produces less quantity at a higher price than if the market were perfectly competitive. The fact that a monopoly has a downward-sloping demand curve means that the relationship between total revenue and output for a monopoly is much different than that of competitive companies. Total revenue equals price times quantity. A competitive company has a perfectly elastic demand curve meaning that total revenue is proportional to output. Thus the total revenue curve for a competitive company is a ray with a slope equal to the market price. A competitive company can sell all the output it desires at the market price. For a monopoly to increase sales it must reduce price. Thus the total revenue curve for a monopoly is a parabola that begins at the origin and reaches a maximum value then continuously decreases until total revenue is again zero. Total revenue has its maximum value when the slope of the total revenue function is zero. The slope of the total revenue function is marginal revenue. So the revenue maximizing quantity and price occur when MR = 0. For example, assume that the monopoly's demand function is P = 50 − 2Q. The total revenue function would be TR = 50Q − 2Q2 and marginal revenue would be 50 − 4Q. Setting marginal revenue equal to zero we have 50 − 4 Q = 0 {\displaystyle 50-4Q=0} − 4 Q = − 50 {\displaystyle -4Q=-50} Q = 12.5 {\displaystyle Q=12.5} So the revenue maximizing quantity for the monopoly is 12.5 units and the revenue maximizing price is 25. A company with a monopoly does not experience price pressure from competitors, although it may experience pricing pressure from potential competition. If a company increases prices too much, then others may enter the market if they are able to provide the same good, or a substitute, at a lesser price. The idea that monopolies in markets with easy entry need not be regulated against is known as the "revolution in monopoly theory".A monopolist can extract only one premium, and getting into complementary markets does not pay. That is, the total profits a monopolist could earn if it sought to leverage its monopoly in one market by monopolizing a complementary market are equal to the extra profits it could earn anyway by charging more for the monopoly product itself. However, the one monopoly profit theorem is not true if customers in the monopoly good are stranded or poorly informed, or if the tied good has high fixed costs. A pure monopoly has the same economic rationality of perfectly competitive companies, i.e. to optimise a profit function given some constraints. By the assumptions of increasing marginal costs, exogenous inputs' prices, and control concentrated on a single agent or entrepreneur, the optimal decision is to equate the marginal cost and marginal revenue of production. Nonetheless, a pure monopoly can – unlike a competitive company – alter the market price for its own convenience: a decrease of production results in a higher price. In the economics' jargon, it is said that pure monopolies have "a downward-sloping demand". An important consequence of such behaviour is that typically a monopoly selects a higher price and lesser quantity of output than a price-taking company; again, less is available at a higher price. A monopoly chooses that price that maximizes the difference between total revenue and total cost. The basic markup rule (as measured by the Lerner index) can be expressed as P − M C P = − 1 E d {\displaystyle {\frac {P-MC}{P}}={\frac {-1}{E_{d}}}} , where E d {\displaystyle E_{d}} is the price elasticity of demand the firm faces. The markup rules indicate that the ratio between profit margin and the price is inversely proportional to the price elasticity of demand. The implication of the rule is that the more elastic the demand for the product the less pricing power the monopoly has. Market power is the ability to increase the product's price above marginal cost without losing all customers. Perfectly competitive (PC) companies have zero market power when it comes to setting prices. All companies of a PC market are price takers. The price is set by the interaction of demand and supply at the market or aggregate level. Individual companies simply take the price determined by the market and produce that quantity of output that maximizes the company's profits. If a PC company attempted to increase prices above the market level all its customers would abandon the company and purchase at the market price from other companies. A monopoly has considerable although not unlimited market power. A monopoly has the power to set prices or quantities although not both. A monopoly is a price maker. The monopoly is the market and prices are set by the monopolist based on their circumstances and not the interaction of demand and supply. The two primary factors determining monopoly market power are the company's demand curve and its cost structure.Market power is the ability to affect the terms and conditions of exchange so that the price of a product is set by a single company (price is not imposed by the market as in perfect competition). Although a monopoly's market power is great it is still limited by the demand side of the market. A monopoly has a negatively sloped demand curve, not a perfectly inelastic curve. Consequently, any price increase will result in the loss of some customers. Price discrimination allows a monopolist to increase its profit by charging higher prices for identical goods to those who are willing or able to pay more. For example, most economic textbooks cost more in the United States than in developing countries like Ethiopia. In this case, the publisher is using its government-granted copyright monopoly to price discriminate between the generally wealthier American economics students and the generally poorer Ethiopian economics students. Similarly, most patented medications cost more in the U.S. than in other countries with a (presumed) poorer customer base. Typically, a high general price is listed, and various market segments get varying discounts. This is an example of framing to make the process of charging some people higher prices more socially acceptable. Perfect price discrimination would allow the monopolist to charge each customer the exact maximum amount they would be willing to pay. This would allow the monopolist to extract all the consumer surplus of the market. A domestic example would be the cost of airplane flights in relation to their takeoff time; the closer they are to flight, the higher the plane tickets will cost, discriminating against late planners and often business flyers. While such perfect price discrimination is a theoretical construct, advances in information technology and micromarketing may bring it closer to the realm of possibility. Partial price discrimination can cause some customers who are inappropriately pooled with high price customers to be excluded from the market. For example, a poor student in the U.S. might be excluded from purchasing an economics textbook at the U.S. price, which the student may have been able to purchase at the Ethiopian price. Similarly, a wealthy student in Ethiopia may be able to or willing to buy at the U.S. price, though naturally would hide such a fact from the monopolist so as to pay the reduced third world price. These are deadweight losses and decrease a monopolist's profits. Deadweight loss is considered detrimental to society and market participation. As such, monopolists have substantial economic interest in improving their market information and market segmenting.There is important information for one to remember when considering the monopoly model diagram (and its associated conclusions) displayed here. The result that monopoly prices are higher, and production output lesser, than a competitive company follow from a requirement that the monopoly not charge different prices for different customers. That is, the monopoly is restricted from engaging in price discrimination (this is termed first degree price discrimination, such that all customers are charged the same amount). If the monopoly were permitted to charge individualised prices (this is termed third degree price discrimination), the quantity produced, and the price charged to the marginal customer, would be identical to that of a competitive company, thus eliminating the deadweight loss; however, all gains from trade (social welfare) would accrue to the monopolist and none to the consumer. In essence, every consumer would be indifferent between going completely without the product or service and being able to purchase it from the monopolist.As long as the price elasticity of demand for most customers is less than one in absolute value, it is advantageous for a company to increase its prices: it receives more money for fewer goods. With a price increase, price elasticity tends to increase, and in the optimum case above it will be greater than one for most customers.A company maximizes profit by selling where marginal revenue equals marginal cost. A company that does not engage in price discrimination will charge the profit maximizing price, P*, to all its customers. In such circumstances there are customers who would be willing to pay a higher price than P* and those who will not pay P* but would buy at a lower price. A price discrimination strategy is to charge less price sensitive buyers a higher price and the more price sensitive buyers a lower price. Thus additional revenue is generated from two sources. The basic problem is to identify customers by their willingness to pay. The purpose of price discrimination is to transfer consumer surplus to the producer. Consumer surplus is the difference between the value of a good to a consumer and the price the consumer must pay in the market to purchase it. Price discrimination is not limited to monopolies. Market power is a company's ability to increase prices without losing all its customers. Any company that has market power can engage in price discrimination. Perfect competition is the only market form in which price discrimination would be impossible (a perfectly competitive company has a perfectly elastic demand curve and has no market power).There are three forms of price discrimination. First degree price discrimination charges each consumer the maximum price the consumer is willing to pay. Second degree price discrimination involves quantity discounts. Third degree price discrimination involves grouping consumers according to willingness to pay as measured by their price elasticities of demand and charging each group a different price. Third degree price discrimination is the most prevalent type.There are three conditions that must be present for a company to engage in successful price discrimination. First, the company must have market power. Second, the company must be able to sort customers according to their willingness to pay for the good. Third, the firm must be able to prevent resell. A company must have some degree of market power to practice price discrimination. Without market power a company cannot charge more than the market price. Any market structure characterized by a downward sloping demand curve has market power – monopoly, monopolistic competition and oligopoly. The only market structure that has no market power is perfect competition.A company wishing to practice price discrimination must be able to prevent middlemen or brokers from acquiring the consumer surplus for themselves. The company accomplishes this by preventing or limiting resale. Many methods are used to prevent resale. For instance, persons are required to show photographic identification and a boarding pass before boarding an airplane. Most travelers assume that this practice is strictly a matter of security. However, a primary purpose in requesting photographic identification is to confirm that the ticket purchaser is the person about to board the airplane and not someone who has repurchased the ticket from a discount buyer.The inability to prevent resale is the largest obstacle to successful price discrimination. Companies have however developed numerous methods to prevent resale. For example, universities require that students show identification before entering sporting events. Governments may make it illegal to resell tickets or products. In Boston, Red Sox baseball tickets can only be resold legally to the team. The three basic forms of price discrimination are first, second and third degree price discrimination. In first degree price discrimination the company charges the maximum price each customer is willing to pay. The maximum price a consumer is willing to pay for a unit of the good is the reservation price. Thus for each unit the seller tries to set the price equal to the consumer's reservation price. Direct information about a consumer's willingness to pay is rarely available. Sellers tend to rely on secondary information such as where a person lives (postal codes); for example, catalog retailers can use mail high-priced catalogs to high-income postal codes. First degree price discrimination most frequently occurs in regard to professional services or in transactions involving direct buyer-seller negotiations. For example, an accountant who has prepared a consumer's tax return has information that can be used to charge customers based on an estimate of their ability to pay.In second degree price discrimination or quantity discrimination customers are charged different prices based on how much they buy. There is a single price schedule for all consumers but the prices vary depending on the quantity of the good bought. The theory of second degree price discrimination is a consumer is willing to buy only a certain quantity of a good at a given price. Companies know that consumer's willingness to buy decreases as more units are purchased. The task for the seller is to identify these price points and to reduce the price once one is reached in the hope that a reduced price will trigger additional purchases from the consumer. For example, sell in unit blocks rather than individual units. In third degree price discrimination or multi-market price discrimination the seller divides the consumers into different groups according to their willingness to pay as measured by their price elasticity of demand. Each group of consumers effectively becomes a separate market with its own demand curve and marginal revenue curve. The firm then attempts to maximize profits in each segment by equating MR and MC, Generally the company charges a higher price to the group with a more price inelastic demand and a relatively lesser price to the group with a more elastic demand. Examples of third degree price discrimination abound. Airlines charge higher prices to business travelers than to vacation travelers. The reasoning is that the demand curve for a vacation traveler is relatively elastic while the demand curve for a business traveler is relatively inelastic. Any determinant of price elasticity of demand can be used to segment markets. For example, seniors have a more elastic demand for movies than do young adults because they generally have more free time. Thus theaters will offer discount tickets to seniors. Assume that by a uniform pricing system the monopolist would sell five units at a price of $10 per unit. Assume that his marginal cost is $5 per unit. Total revenue would be $50, total costs would be $25 and profits would be $25. If the monopolist practiced price discrimination he would sell the first unit for $50 the second unit for $40 and so on. Total revenue would be $150, his total cost would be $25 and his profit would be $125.00. Several things are worth noting. The monopolist acquires all the consumer surplus and eliminates practically all the deadweight loss because he is willing to sell to anyone who is willing to pay at least the marginal cost. Thus the price discrimination promotes efficiency. Secondly, by the pricing scheme price = average revenue and equals marginal revenue. That is the monopolist behaving like a perfectly competitive company. Thirdly, the discriminating monopolist produces a larger quantity than the monopolist operating by a uniform pricing scheme

What is micromarketing?

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What are the examples for micromarketing strategy marketing?

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Put yourself in the position of an entrepreneur who is developing a new propelled robotic snowblower similar to a robotic vacuum cleaner to introduce into the market?

Influences on attitudes formation?

How did muckrakers contribute to the rise of progressivism in the early years of 20th centurey?

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