In order to produce potential customers of a particular product or service, a well-planned market strategy is required. Various companies have various marketing policies and it mainly depends on data regarding the aimed customer, main marketing messages, as well as high-level content.
The types and timings of marketing activities are laid out in a document called a marketing plan. The brand of the organization and the value proposition mainly depends on the marketing strategy.
Let’s run through a few strategies and tips about the money back guarantee as well as a marketing strategy.
Understanding and Creating a Market Strategy:
The terms market strategy and market plans are intertwined but are not the same. They do feed one another. We will get a big picture of what the business offers through the marketing strategy, on the other hand, the market plan works on how the business will get across the key message.
In a broader way, marketing strategies means what is to be achieved under marketing. On the basis of the analysis of best market opportunities, the market strategy lays value propositions and target markets that will be offered.
The market strategy should go beyond the company’s value proposition which indicates the company’s competitive advantage in the market. Some business may have particular strategies and the marketing and business operations will revolve around that. And it may not be suitable for other companies in the same field.
So the best method is, to begin with, the value proposition and extracting the key marketing messages from that. Once the value proposition is concisely stated half the work is done.
The modern market is having broader meanings. Instead of selling some product made by the seller, importance is given to customers. Goods are made as per consumer needs and the seller always will be in a query of what the consumer actually needs.
Sticking the customers to a particular brand is not an easy task. With the customer-oriented service only, the seller can survive in the field and earn a profit. The 6 main modern concepts of marketing are given below.
- Production concept
- Product concept
- Selling concept
- Marketing concept
- Consumer concept
- Societal marketing concept
In the above strategies marketing concept mainly provides the uniqueness to different sellers. The same product can be made by different sellers with the same quality and if one is poor in marketing and the other is best; the results are obvious.
Along with the marketing concept, one should give importance to consumer concept also so that a one to one marketing is possible by giving more attention to the consumers. We will see the important aspect of consumer marketing in detail i.e., money back guarantees. Being the most popular guarantee, it is almost considered as a right.
A look into the Money Back Guarantee Scheme:
Chasing after the competitive advantage in a packed industry, many are offering money back guarantees. By building trust with the customers, they are able to remove the unwanted friction from the customer side.
Even though we all have heard about money back guarantees, have you ever thought how it actually works? Originated from the 19 the century, in a door to door delivery system the full refunds of the products were offered if the customers didn’t like the product.
During those days this was done to combat the truth that many products were totally new in the marketplace. But today with the discovery of thousands of other businesses, the money back guarantee reduces the risk and invokes the customers.
Money back guarantee may not be suitable for all business. Since it offers many benefits, notable risks are also possible in keeping the promises. As in every other field, many pros and cons are there in the money back guarantee also.
The Pros of Money Back Guarantee:
1. Reduced risk:
The money back guarantee gives a chance to the people to give a try on your product, without any special efforts. They are sure about their money even if they don’t like the product. When customers don’t get a chance to make a trial of a product, like in online trades, this can be very powerful.
Customers won’t be stuck with the purchase and attract more and more potential buyers into the business. Moreover, the money back guarantee reduces the risk of false promises.
2. Enhances trust:
When the guarantee is offered, you can impress them with the fact that you stand behind your product than the chance to get the money refunded. And the money back guarantee gives 100 percent surety about the product quality. This increased trust for a particular brand will not only beneficial to the current purchases but will favor the future business too.
3. Stay Ahead:
Nowadays the market is expanding like anything else. Products of the same kinds are marketed by many companies. So how can you expect to stay different from others? The money back guarantee is a good way to be different from competitors.
For instance, if a product, sold by two brands having the same price, the one with a money back guarantee will attract more customers and hence increase its sales.
4. Improves client retention
Even the customers didn’t like the item, but you made them happy with the money back policy or replacement, they may stick around the same brand to find their favorite items. Thus long term customer relationship can be maintained.
The Cons of offering the Money Back Guarantee:
If this scheme works on a perfect basis, every other business would try to implement the same method. Flawless business strategies are less and one should carefully analyze the negatives that are often related to this technique.
1. Invites bad customers:
This is considered to be the main drawback of this approach. Many customers make an advantage of this guarantee by using the products for their own advantage and returning the same. Even though this is not a common practice, very little customers are exploiting this facility.
It is always better to be aware prior to providing a guarantee as there are many dishonest people who play with the company.
2. Unable to meet the over expectations:
Many people will have many expectations regarding a single product. It is unrealistic to meet so many expectations. The claimed expectations can be met but the claims can be misinterpreted or can be taken in a wrong intention. So the possibility of friction between the customers and the company will be more. Then the company will be in danger with bad customer care services.
3. The accounting will get complicated
Money back guarantees are always available for typical periods. Income documents and expense sheets should be extended depending on the length of the offer. So the accurate tracking of the accounts will be a big burden. The issues with credit card companies are also a problem since they don’t allow refunds after a certain period.
Researches show that irrespective of the negatives of money back guarantees, it always proved to be beneficial to the brands. From the total purchase, only five or six percentage will get returned and sudden changes can be expected in the number by serial returners.
The Psychology behind the Money Back Guarantee:
The lenient return policies create more returns but it is more strongly correlated with increased purchase. The retailers will get more benefits from the assured return policies. Since all return policies are not equal, each will exhibit different characteristics such as time, money, effort, scope and exchange.
Time is the duration within one must return the product. It may vary from 5 days to 90 days. 2nd characteristic money refers to the reimbursement amount like one will get 100 percent or less. Effort means the special actions we take to return the product.
(Keeping the bill or providing other forms). Scope indicates the eligibility of return (whether sale merchandise is eligible). Finally, exchange means you will be able to get store credits for the return.
Surprisingly the leniency in time reduces the return rate. The longer the customer keeps a product with them, the higher the chances of attachment with the product. And during the long gap, the urgency to return a product gets lessened and they will get used to that thing. Easier return policies also increase the purchase.
The retailers will get most affected by this. As this is an era of online shopping, they provide many platforms to make the first purchase itself the best one. They ask the feedbacks through email and provide the correct apparel fit predictors, provide many photographs of the product in different angles and product descriptions.
Depending on what items are eligible for return will limit the return rates even though they can’t do much with the sales rate. Depending on many factors like whether it is a durable good or consumable, or it is slow moving or fast-moving, different people will have different reasons for buying and their concerns about quality and risk may differ.
The Survey Results:
Based on the category and channel type there is variation in return rates. For fashion apparels sold in traditional stores, it is as high as about 35%, and for internet and catalog sales, the rates are higher. It was found that the returned products were not defective in many cases.
The money back policy is getting abused and many people buy a product with the intention of returning it, which is a trend nowadays. Retailers are managing this situation which offers partial reimbursement instead of 100 percent guarantee.
They take a restocking fee which is considered to be the charge for returns. In many cases, 10- 20 % of the original purchase price is charged as the restocking fee.
In the electronics and computer industry, a survey shows that most customers returned the products with simple explanations like ‘the product doesn’t meet the expectation’. 68 % returns are included in this category and 27 % expresses it as ‘buyer’s self-reproach’.
The truly defective products were only 5 %. Regardless of the reason, the sellers can’t resell the returned products as ‘new’, even though the products were never used.
The stalwarts in electronics products such as Wal-Mart and Best-Buy restock the returned items. Afterward, resell them as ‘open-box’ items at a discount price. By open box, it simply means that the product is marked as being used or opened previously.
This open box sale creates so many opportunities in attracting price-conscious customers. The drawback of open-box sales is that it will create a negative impact on the sales of brand new products in the store. It would naturally be additional work for retailers while handling returns as repacking and additional costs are to be added.
Money Back Guarantee’s process of Winning or Losing Money:
Money back guarantees budget, as well as profits, is a quite mild task when retailers handle it. Sales, as well as profit, are boosted and hence retailers employ the usage of money back guarantee. Inventory stocking decisions, refunding as well as pricing of the product are the main aspects concentrated in a money back guarantee.
There are few facts such as the dissatisfaction percent after the purchase of a product, demand for open box products and uncertainty in demand that should be taken into account while planning the money back guarantee. The restocking fee is one aspect the retailers can execute and also the resale of the returned products which intern will encourage the sales and discourage the returns.
There is always a risk for product to be returned and is taken care of by the return policies. This scenario happens mostly for latest technologies, fashion products, and innovative products too. It is interesting to notice that the reselling returns compliment the refunding scheme. So, high-risk products proved to be the most beneficial, when they are resold after being returned.
The economics of money back policies work well for retailers by enhancing their brand values and resale through open box products. With the proper implementation and marketing, the money back guarantees can yield high returns by cultivating trust and differentiating from the competitors.