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Editorial Board of “Holistic Marketing Management” (A refereed journal published four times annually by the School of Management-Marketing of the Romanian-American University) Editor -in-Chief Theodor Valentin PURCĂREA Editorial Board Managing Director EuroHandels Institute Retail, Germany; President of EuCVoT; President of European Retail Academy; Member of the Astana Bernd HALLIER

Economic Scientists Club; Chairman of the Advisory Board of EuroShop; Chairman of the Board of the Orgainvent; Trustee of EHI Retail Institute at GLOBALG.A.P. Association of Management and International Association of Management,

John SAEE

USA; Australian Graduate School of Entrepreneurship, the Faculty of Business and Enterprise, Swinburne University of Technology; Member of France’s National Academy of Scientific Research (CNRS) Professor of Food Marketing, Erivan K. Haub School of

John L. STANTON

Business, Saint Joseph’s University Philadelphia, USA; Editor, Journal of Food Products Marketing

Léon F. WEGNEZ

Secretary General, International Association of the Distributive Trade, AIDA Brussels; Member of France’s Academy of Commercial Sciences Internet Marketing Professor, College of Business, San Francisco

William PERTTULA

State University, USA Professor of Strategy and Entrepreneurship, Research Area Leader, Oxford

Levent ALTINAY

School of Hospitality Management, Faculty of Business, Oxford Brookes University, UK

Dana ZADRAZILOVA Riccardo BELTRAMO Sinisa ZARIC Gabriela SABĂU Hélène NIKOLOPOULOU Vasa LÁSZLÓ Peter STARCHON John MURRAY Kamil PÍCHA

Dean of Faculty of International Economic Relations, University of Economics, Prague, Czech Republic University of Turin, Italy University of Belgrade, Yugoslavia Memorial University, Grenfell Campus, Corner Brook, Canada University of Lille 3, France Szent Istvan University, Hungary Comenius University in Bratislava, Slovakia Faculty of Business, Dublin Institute of Technology, Ireland

Faculty of Economics,University of South Bohemia in Ceske Budejovice

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Constantin ROŞCA Irena JINDRICHOVSKA Dumitru MIRON Valeriu IOAN-FRANC

President of Romanian Scientific Society of Management- SSMAR

Deputy Head of Department of Business Economics, University of Economics and Management, Prague, Czech Republic Academy of Economic Studies in Bucharest National Institute for Economic Research, Romanian Academy; Romanian Marketing Association

Iacob CĂTOIU

Academy of Economic Studies in Bucharest

Virgil BALAURE

Academy of Economic Studies in Bucharest

Gheorghe ORZAN

Academy of Economic Studies in Bucharest

Luigi DUMITRESCU Marius D. Pop

Lucian Blaga University of Sibiu Babes-Bolyai University, Cluj-Napoca Technical University of Cluj-Napoca, Management and Economic

Ion VOICU SUCALA

Engineering Department; University of Glasgow, UK, College of Social Sciences, School of Social & Political Sciences; Managing Editor, Review of Management and Economic Engineering

Virgil POPA

Valahia University of Târgovişte

Ana-Maria PREDA

Romanian-American University

Ileana PONORAN

Romanian-American University

Ovidiu FOLCUȚ

Romanian-American University

Doinița CIOCÎRLAN

Romanian-American University

Marius Dan DALOTĂ

Romanian-American University

Mihai PAPUC

Romanian-American University

Gheorghe ILIESCU

Romanian-American University

Alexandru IONESCU

Romanian-American University

Olga POTECEA

Romanian-American University

Oana PREDA

Romanian-American University

Nicoleta DUMITRU

Romanian-American University

Monica Paula RAȚIU

Romanian-American University

Costel NEGRICEA

Romanian-American University

Associate Editors Cristina NEAGOE Dan SMEDESCU Art Designer Director Alexandru BEJAN Holistic Marketing Management

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Editorial: Marketing accountability, critical dimensions of the new marketing organization, quality higher education and understanding the communication of new knowledge In 2008, writing about „Focusing on what is important to customers” and „The future marketing department: more customer insight”, I have underlined the concern that in order to understand what customers expect marketers must be value driven, implementing the knowledge obtained, overcoming the barriers to communications, translating each value proposition into the customer’s language, thinking of expertise as an abundant resource and time to respond as a scarce one, working in a way that enables the relationship marketing process to deliver on keystakeholder expectation, considering that the “machinery” made up of the employees’ engagement and the clients’ engagement can significantly influence the company’s performance. And quoting the well known Don E. Shultz – “Marketing is what the organization does” – I have referred to Shultz’s company proposal concerning a “media consumption model”, and to marketers’ need, within the “next-generation marketing” in which the customer experience is going behind the lines, to start thinking about customers as income flows, then think about all of the ways customers touch the company or the company touches them. In 2009, in a White Paper entitled „The Future of Marketing”, published by the Chartered Institute of Marketing (Evmorfia Argyriou, Peter Leeflang, John Saunders, Peter Verhoeff), it was argued that marketers have a key role to play in better business performance, but marketing can be hampered by short-term thinking by the business and a lack of accountability, creativity and courage on the part of marketers themselves… By having respect for the marketing department activities, recognizing the strategic importance for marketing (there is a well known agreement on marketing’ s important contribution to strategy, the exceptional importance of branding, and the need for businesses to be customer centered), top management can win by backing marketing (in both B2B and B2C markets, marketing being more developed in its B2C birthplace) which has the unique ability to add value in the market place and constitutes the facilitator helping the whole organization to survive and thrive by serving customers (customer proximity being a marketing strength), conveying customer needs across the company and converting best marketers knowledge into product ideas, considering the ingredients of high corporate returns: product quality, innovation and strong brands. As marketing accountability is considered being tough intellectually and spiritually, this involves, in the opinion of the mentioned authors, the followings: a) projecting and living with financial outcomes of plans and strategies; b) developing several skills (forecasting outcomes; dynamic forecasting showing the impact of marketing activities on sales: profits and return on investment); c) having courage (this being bundled with analytical skills that are central to market accountability), the courage being considered the greatest of the highlighted trifecta (accountability, creativity and courage); c) being creative (engaging not only the left hemisphere of the brain for the sequential and analytical processes necessary for accountability, but also engaging the holistic and intuitive strengths of the right hemisphere that help creative marketing). In the prestigious McKinsey Quarterly (Marketing & Sales Practice), July 2011, Tom French, Laura LaBerge, and Paul Magill emphasized that „We’re all marketers now”, challenged to redefine the traditional marketing organization, while intensively collaborating to adapt the organizations to the way customers now behave, marketing being the company (and the company Holistic Marketing Management

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being the marketing vehicle) in the era of engagement, but not any kind of marketing, but an accountable one. In other words, well understanding the difference between being responsible (in a general sense; you can delegate it) for something and being held accountable (more measurable; you can’t delegate it to anyone) if it goes wrong, McKinsey representatives are pledging for the need for the marketing organization to become the customer-engagement engine (a customer engagement going beyond pure communication to include the product or service experience itself), while considering all related interactions with customers that make up the customer experience (challenged in turn by the multiplication of the customers renewed touch points used to to interact with companies) within the reality that the buying process has become collaborative, and must ensure critical touch points that drive engagement. According to Tom French, Laura LaBerge, and Paul Magill, a new kind of marketing organization must evolve along four critical dimensions: distribute more activities; more councils and partnerships; elevate the role of customer insights; more data rich and analytically intense. There is a real pressure of quickly responding to the signs of customers’ changing needs, focusing on problem-solving and strategic-marketing skills, stimulating cross-functional collaboration and a clear delineation of roles, entering into creative arrangements with outside parties, and raising the organizational barrier to engagement and avoiding the risk of being overtaken by competitors. Coming back to the beginning of this Editorial and to the opinions expressed in 2008, it is worth to remember another underlined idea on that occasion, namely that without knowledge through education, innovation suffers in the context of stiff competition, education being the most important instrument of the company for adaptation to economic change as an opportunity. And there is a very interesting connection with some ideas expressed in another recent Editorial, in the „Romanian Distribution Committee Magazine”, Volume, 6, Issue 6, following the „SANABUNA International 2011”: „Quality higher education is a powerful growth engine… Competitive high quality universities systems are indispensable to pursue long-term robust results… Systemic becomes almost a way of being and not just a problem solving methodology… We reiterate the idea that we cannot be consumers informed of knowledge without reflecting upon this knowledge (explicit or tacit), developing critical thinking (reasoning used in developing arguments, productive practicies, appreciation and understanding of the impact on current life etc.), understanding the communication of new knowledge which makes the world permanently transforming”. Theodor Valentin Purcărea Editor - in - Chief

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HOLISTIC MARKETING MANAGEMENT AND SOCIAL MEDIA Prof. William PERTTULA, PhD Internet Marketing Professor, College of Business, San Francisco State University Abstract: Social media and social media marketing are real challenges to holistic marketing management approach focusing on real customer value. A distinct problem for social media is making a profit when the standard practice is to not charge the user any money. Social media marketing relies on its similarity to word of mouth marketing which has always been praised for its effectiveness. Social media marketing can be faster and cheaper that other forms of marketing, and should be integrated with the rest of the marketing plan in keeping with the central ideas of holistic marketing management. Key Words: Social media marketing, Internet marketing, Marketing plan JEL Classification: M15, M31 Any discussion of holistic marketing management must take note of social media and social media marketing. Social media is dominated in 2011 by Facebook after its explosive growth to 800 million registered accounts world-wide. Other big names in social media are YouTube, Twitter, Tumbler and LinkedIn. Social media marketing is the use of social media in its various forms by organizations trying to communicate with their customers or clients.

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As Internet marketing became pervasive in the developed countries in the years after 2000 many commentators wrote that the rules of marketing had changed: the new rules of marketing were digital. After several years of this misinformation there has been general agreement that no basic rules of marketing have changed, rather, the Internet has meant lower costs and higher speeds for nearly everything in the marketing and customer relationship field. Social marketing exhibits these two changes. Communication is much faster and cheaper than in the past. Social media marketing relies on its similarity to word of mouth marketing which has always been praised for its effectiveness. Trust and believability are usually characteristics of word of mouth communications. Word of mouth communications usually have great effectiveness but in the past have taken too long to reach a large enough number of people for most businesses that are trying to grow quickly. It is a rare product or service that can grow at 30 to 40 percent a year relying on its customers or users to tell friends in person or by telephone. Rapid sales or usage growth in the past relied on mass advertising to reach mass audiences at great expense. Dropbox, a web based file hosting service, is a recent startup that benefited from universal electronic communication techniques. Dropbox began in 2008 with a file storage service that was simple to understand and that worked quickly and reliably. The company encouraged electronic word of mouth by giving existing users who referred a new user more free storage for their files. Publicity, which is free, in the major tech magazines and other media contributed greatly to its growth to 50 million users in 2011 after just three years of operation. Dropbox grew rapidly despite not using advertising or even search engine marketing with Google Adwords text ads after discovering that it was costing about $300 per new user for a service that was free to users who needed only 2 Gb of file storage. The speed of communications enabled by the Internet has meant that a type of word of mouth communication can be practiced at high speeds by millions of people. A 2011 study by bitly.com on the “half-life� of Tweets on Twitter, the 140 character microblogging service, and posts on Facebook showed that brief communications move very quickly through social media. In the first three hours after a Tweet or a post on Facebook containing a bitly.com shortened link approximately 300000 people click on the link. [2] In the next few hours another 300000 people are likely to click on the link. Thus, for no promotional expense an audience of nearly million may have seen your picture or story. It is no wonder businesses are using social media. The costs are near zero and the speed of communication is measured in just hours with potential audiences in the hundreds of thousands. However, the persistence of the message is very short compared to a newspaper or magazine advertisement or a television campaign run over a period of weeks. If a business is willing to pay for a Tweet by a person with a large number of followers on Twitter, its brief message may be seen by millions in a couple of hours. Famous people such as celebrity Kim Kardashian, actress Lindsay Lohan, or skateboarder Ryan Sheckler charge $2000 to $3000 to send one promotional Tweet to their millions of followers. A significant cost advantage that social media sites have over online newspapers and magazines is that newspapers and magazines must pay for their content while social media sites such as Facebook get their content for free from their users. A cost/benefit analysis strongly favors social media. A distinct problem for social media is making a profit when the standard practice is to not charge the user any money. There are two basic ways to make money online: sell a product or service or sell advertising space to advertisers who want to reach your web site audience. Facebook, until 2011, relied solely on selling advertising space. Advertisers liked the large number of Facebook users and their extensive time spent on the web page

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but generally found that Facebook users were not interested in the ads and so the bid price or cost per thousand (CPM) viewers that Facebook could charge was very low. Dividing Facebook’s total revenue in 2011 by total registered accounts yields only about $.30 per account per month. Compare this to $.40 per account per month for Dropbox in 2011 after just three years. After seven years of operation Facebook generates very little income. This appears to be a rather common attribute of social media because the users’ focus when visiting the web site is the news and pictures from their friends not commercial messages from businesses no matter how targeted the message is. This table shows that fewer people reported taking action after seeing an ad on a social media site compared to four other types of ads.

Social media marketing can be faster and cheaper that other forms of marketing. Most organizations should be using social media marketing once they learn how to present themselves and their products appropriately on whatever types of social media they chose to use. Social media marketing should be integrated with the rest of the marketing plan in keeping with the central ideas of holistic marketing management. Bibliography: [1]. Experian Hitwise [2]. http://blog.bitly.com/post/9887686919/you-just-shared-a-link-how-long-will-people-

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CONSIDERATIONS CONCERNING PRODUCT INNOVATION APPROACH IN SUCCESSFUL MANUFACTURING ORGANISATIONS Prof. Marius-Dan DALOTĂ, Ph.D. Romanian-American University 1B, Expoziţiei Avenue, Sector 1, Bucharest dalota.marius.dan@profesor.rau.ro

Abstract: Fast product innovation and creativity is driving the development strategies of the most nations enjoying high economic growth. The development of fast innovative new products needs to be based on a close alignment between technology, products and markets, with a focus on achieving increased aggregate value. This paper is dealing with important technological and organizational integration variables of new organizational products and with the motivation of workers to innovate. Keywords: knowledge management; organizational behaviour; innovation management; motivation; learning organizations; JEL Classification: M10 1. Introduction The diverse range of technological possibilities creates unprecedented change bringing both product and market uncertainty and as a consequence new challenges for organizations. To meet such challenges organizations need to engender both a responsive and adaptable approach to market demands. For many product innovation and creativity is a strategy of fundamental importance, in sustaining development in turbulent and volatile environments. Competitive advantage is viewed by organizations as being directly related to various integral elements of a product which includes: product superiority, uniqueness, and competitive pricing. Issues of common importance to organizations, which affect the processes of new product development and subsequent performance outcomes, include: • organizational management style; • attention to detail in the processes of new product development; • support for product innovation by top management; • organizational strategic thinking, and manufacturing facilities to support new product development. A common theme of all the issues identified as important to organizations in the development of new products is the relevance of both technological and organizational integration. Organizations are increasingly concentrating on responsiveness and flexibility through product innovation. The rapid delivery of new products clearly requires effective

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communications between design, engineering, marketing and manufacture enabling organizations to be adaptable and responsive to market conditions. From other point of view, motivation to innovate is an outcome of the existence of certain antecedents that are responsive to the dynamics of motivation in organizational environment, this work develops a conceptual model synthesizing motivations “what” and “how” that will bring human creativity in organizations which thrive on innovation. Since productive knowledge in organizations is ultimately a product of the human mind, it cannot be manipulated like sophisticated machines, fancy systems, or efficient controls. Organizations that desire to use knowledge in their products, processes, and services, have to know how to engage the human mind in their operations. Therefore, understanding the theory and application of motivation is very important in managing human resource in making these new organizations succeed. The question surrounding how to motivate employees has intrigued behaviorists for over a century. This interest started when the large corporation became the economy’s most dominant player. 2. !Technological and organizational organizational products

integration

variables

of

new

Manufacturing involvement along with marketing and research & development (R&D), from the beginning creates a solid commitment throughout the new product development processes. When manufacturing enters later, integration with R&D and marketing may only be partly achieved in the following new product development processes and as a consequence creates a lack of harmony and trust between functional groups (Figure1). Even though early involvement by manufacturing is accepted as being important for the success of product innovation, many organisations continue to use a sequential approach to the processes of new product development. Plant equipment such as automatic assembly, can help to attain seamless

Phases of the new development product

Figure 1 – Changes in the new development process integration of technology in organizations (Figure2). Long term investment enables

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organizations to achieve performance gains such as speed of new product development but must be done with consistent long term objectives and a view to maintaining compatibility within operations. The shift towards international standards which has occurred over the past five to ten years, has helped to improve overall integration and speed of new product development.

Figure 2 – Technological and organizational integration variables of new organizational products (NPD) Cultural integration variables of key importance for improving speed of new product development were R&D and marketing openness, and the need to create deep understanding between marketing and manufacturing. The findings would appear to suggest the need for both a market orientation and design for manufacture to be followed simultaneously. 3.

Drivers of motivating behaviour for innovation

There are a number of succinct factors present in the contemporary organizational environment that have opened up and are forcing a review of the motivation theory and its practice, which, until now, had been considered as formulated, empirically tested and established. These factors affect both content and process of motivation. That is why these are the drivers of motivation in the knowledge work environment. It becomes important for managers to decide how to motivate their employees only after considering these factors as they apply to their organizational environment and, preferably, after making some adaptations specific to each department, section, and employee.

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Typically, motivating behaviour drivers to innovation of knowledge workers is the work itself – the assignments or projects they get: a. In their perception, how important is the work that they would be doing? b. Is it exciting? c. Is it challenging? d. Would they succeed at it? e. This assignment will result in working with whom? For example, would it result in being surrounded by the best of the best? Would the assignment be in an organization where there is respect, trust, fairness, and good management? f. What would the experience bring as outcomes, such as rewards, recognition, career advancement, learning, and satisfaction? Answer to the above questions helps managers understand the drivers of motivating behaviour of knowledge workers. The whole spectrum of these drivers is classified into the following five groups: (1) The sociological driver. Sociology has always been important in the understanding of any aspect of human behavior, such as work motivation. Motivation theory and practice considers this; however, human sociology that had largely remained constant for a long time started to experience revolutionary changes in the later parts of the second half of the twentieth century. (2) The psychological driver. Work motivation theory applicable to traditional work is based on human behavior that has its roots in positive reinforcement – primarily, in money. Its practices carry a premise that given proper incentives, all workers would give their best to their employers. This forms the basis for learning, training, and behavior modification in traditional organizations. In innovation instead of money, self has become the prime positive reinforcer. For example, some managers who have strategically used self-esteem in assigning jobs to their employees have succeeded in motivating them to innovate and give higher productivity. (3) The generational driver. Employers report that younger employees are too keen to take on responsibility, quickly move up the hierarchy and become successful. However, they cannot deduce if it means that they are too interested and motivated to work or simply too impatient to get rich. These younger employees are employees of the newer generations. Many knowledge workers are likely to fall in this category. The last decade saw their introduction to the workplace. The future of knowledge organizations really belongs to them. It is for these reasons that developing a new understanding on human motivation at work without giving meaningful consideration to young generations not result in a durable theory of knowledge worker motivation. (4) The knowledge work driver. During the later part of the twentieth century, we saw a change in work dimensions and demands due to the induction of the technology, not only in the workplace but in every sphere of human life. In some form, science and technology have been incorporated into almost all jobs in almost all organizations, a process expected to continue into the future. The rise of technology has also resulted in a new large breed of organizations whose primary input, output, or both, are dependent on scientific or technological knowledge typically possessed by individuals rather than owned by an organization. Organizational success that previously

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depended on job-relevant skills in the long term and experienced employees of the firm shifted to explicit and tacit knowledge – the scientific and technical knowledge that employees mostly acquired through university education and training which might have nothing to do with age, experience, or years on the job, and innate knowledge – making younger, newer employees with appropriate work knowledge more important to organizations. Every new job is being designed to incorporate the use of human knowledge to innovate what is done and how it is done. The change in work and workplace brought in by the technology has been so revolutionary and sudden that it caught many managers and motivation the researchers offguard. These resultant dramatic changes in the basic character of work are not incorporated in the established theory and practice of motivation. (5) The cultural driver. Another important change that organizations have experienced during the last couple of decades is the spread of globalization throughout the world. During this period, the European Community further perforated its boundaries to include the free labor movement all over its member states. The USA experienced a surge of immigrants like it never had in the past. A large number of these new immigrants are knowledge workers, not blue-collar, skilled labor. Furthermore, what makes this pattern of American immigration more interesting from the motivation perspective is the variety of regions of the world from where these workers have immigrated to the USA. The lands from where these new immigrants have come have cultures that are quite different from the cultures of the American immigrant workers of the first half of the twentieth century who came predominantly from Europe. Their value systems and religious and spiritual beliefs are not Euro-centered – the systems known to America based on which the past motivation theory and practice were formulated. Work culture, not only in America but also in many other parts of both developed and developing worlds, has been seriously impacted by the revolution in the integration of advancements and efficiencies in computing and telecommunication technologies into work processes. This made it possible for the workers physically away from work, in many cases, far, far away – like in a different country – to impact, through their work etiquettes, the culture of their organization as do those physically present there. These cultural changes put a special emphasis on revising our understanding of how to enhance the motivation of workers since none of the traditional motivation theories is formulated considering the dynamics of these variables. Explaining what motivates knowledge employees that innovate and how the process works in such organizations is quite different from the description that comes from the content and process theories of motivation established during the last century. We recognize that when it comes to understanding the wants and needs of workers a lot has changed due to the shifts in worker demography, culture, work patterns and demands, human sociology, and psychology. These changes are so pronounced that they raise doubts on the validity of the established motivation theories. To successfully motivate their knowledge workers, organizations should do the following: • put in assertive, deliberate effort in dynamically studying the drivers of their employees’ motivating behavior;

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• • 4.

respond to the resultant changes in these drivers by devising responsive motivation antecedents; load these antecedents into major sources from where motivation can emanate.

Conclusions:

Becoming the most economical competitive society in the world in 2010 is one of the targets of the European Union. This target is based on the optimistic planning ideology that within ten years knowledge and expertise can be organized in such a way that added value can be created at the macro and micro level of the Union, states and companies. Producing intelligent products, and producing them in an intelligent way as a reaction to mass production has focused very much on the use of information technology to become creative and smart. Knowledge creation is therefore perceived as one of the major assets of innovative organizations, and innovative organizations are defined by knowledge creation. It seems that innovation and knowledge creation are defined by themselves. Based on the observations regarding what works and what does not in motivating knowledge employees to innovate and how to make it work, it is recognized that there are three sources in most organizations from where work motivation could emerge. The first and the most important source of work motivation is the job that the employee is doing. The second source of motivation is the outcomes from the job. The outcomes include all kinds of known and unknown extrinsic and intrinsic rewards and punishments – whatever employees consider having positive and negative effects on their work behaviour. The last source of motivation is the organizational system, which includes the usual constituents of the management system, such as organizational policies, practices, culture etc. and the establishment items, including the firm’s product line, image, position in its industry and market, financial soundness, and all the other related items that can excite employees about their organization as an entity. Bibliography: [1]. Dalotă Marius Dan, “Successful Implementation of Knowledge Management in Small and Medium Enterprises”, Romanian Economic and Business Review Vol.6 No.1, 2011, pp. 7-18 [2]. Langley David J., Nico Pals, “Adoption of behaviour: predicting success for major innovations”, European Journal of Innovation Management Vol. 8 No. 1, 2005, pp. 5678 [3]. Hardaker Glenn, “An integrated approach towards product innovation in international manufacturing organisations”, European Journal of Innovation Management Volume 1 Number 2 , 1998, pp. 67-73 [4]. Amar A.D., “Motivating knowledge workers to innovate: a model integrating motivation dynamics and antecedents” European Journal of Innovation Management Volume 7, Number 2, 2004, pp. 89-101 [5]. Burgess T.F., N.E. Shaw, “Organisational self-assessment and the adoption of managerial innovations”, International Journal of Productivity and Performance Management Volume 54, Number 2, 2005, pp. 98-112

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CONCEPTUAL ASPECTS REGARDING THE SPECIFICS OF MARKETING STRATEGIES IN THE AUDIOVISUAL FIELD Lecturer Andreea BUDACIA Ph.D Romanian American University 1B, Ezpoziției Avenue, Sector 1, Bucharest Abstract: The global market is a challenge which requires a certain attitude from its economic agents, a proactive behavior meant to ensure advantageous positions in certain domains of activity. In the audiovisual domain, major enterprises have a precise and competitive strategy. Marketing strategies represent “the path chosen by the enterprise in order to achieve certain goals” which are of two types: market strategies and mix strategies. Market strategies typical of audiovisual services have the following criteria for classification: the relation between the demand and the supply, the type of relation with the environment, the competitive relations, the attitude towards viewers. Regarding the services in the audiovisual domain, we’ll take into account, on the one hand, the classical components of mix marketing, namely the product, the price, the investment and the promotion, and, on the other hand, concepts from modern theories such as the personnel (and especially celebrities and the anchor of the respective TV station), the viewer and the relation with the audience. Key Words: Marketing Strategies, Audiovisual Field, Audiovisual Services, Marketing Mix JEL Classification: M 31, M 37, M 39 Specialists in the marketing domain have become more and more aware of the fact that, within the framework of a global economy, business success cannot be guaranteed if the managers of enterprises do not have a market-oriented vision. Without a certain “conscience of the market and of the product”1, survival in such a competitive and dynamic environment will become harder and harder, even impossible. The global market is a challenge which requires a certain attitude from its economic agents, a proactive behavior meant to ensure advantageous positions in certain domains of activity. This competitive position can be obtained through competitive marketing strategies which presuppose the existence of certain abilities based on a strategic orientation in the marketing field. In the audiovisual domain, major enterprises have a precise and competitive strategy. “Having a clear strategy means that managers have the possibility of accepting or

1 2

Kotler Ph., Managementul marketingului, Ed. Teora, Bucureşti, 1999 Cetină I., Marketing competitiv în sectorul serviciilor, Ed. Teora, Bucureşti, 2001

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refusing certain initiatives and that the consumers can be satisfied more easily2. Therefore, certain stages of the marketing strategy can be established3 ”. Table no.1: Identifying the strategy of services in the audiovisual field Establishing the most important characteristics of a certain kind of services in order to come up to and raise above the viewers’ expectations ↓ Detecting the competition’s weak spots ↓ Establishing the present and possible competence of the television, its qualities and its flaws, its system of values ↓ Elaborating a strategy of audiovisual services which responds to the viewers’ needs, exploits the competition’s vulnerability and capitalizes on the potential of the TV station Marketing strategies represent “the path chosen by the enterprise in order to achieve certain goals” which are of two types: market strategies and mix strategies. 4 1. Market strategies typical of audiovisual services Maximizing the profit is one of the marketing’s goals and it is related to the market and to the synchronization between the demand and the supply. The relation between the demand and the supply is strongly connected to the variability of audiovisual services which imposes different strategies at different times, thus differentiated strategies appear. This phenomenon can be noticed especially during summer when the market share decreases; the public appeals to replacement services especially to outdoor entertainment. Usually, differentiated strategies are in fact applied by strong TV stations which have the necessary resources and make the adequate investments. More often than not, on the audiovisual market TV shows appear which are insufficiently differentiated (especially entertainment TV shows) or even undifferentiated (some talkshows where the same guests appear repeatedly and the topics of the debate are always the same). The type of relation with the environment within the framework of which TV stations work also represents an important aspect and it suggests two strategic alternatives: a) partnerships which imply preferential relations, tolerance and cooperation and b) competitive relations. Broadly speaking, on the Romanian audiovisual market the relations between TV stations are competitive; but there are also partnerships when certain TV stations become partners on different occasions (social events, for example). If we refer to other agents that operate on the Romanian market, we notice that partnerships appear when certain TV stations are sponsors of social events. Competitive relations are often seen in Romanian media and especially between TV stations specialized in broadcasting news and political TV shows such as Realitatea TV and Antena 3. 2

Cetină I., Marketing competitiv în sectorul serviciilor, Ed. Teora, Bucureşti, 2001 Cetină I., Marketingul serviciilor – abordare teoretică şi studii de caz -, Ed. Uranus, Bucureşti, 2004 (adapted) 4 Olteanu V., Marketingul serviciilor- o abordare managerială, Ed. Ecomar, Bucureşti, 2003 3

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Taking into account the competitive relations, TV stations make use of specific strategies, namely differentiation (noticeable in all the components of the marketing mix) or imitation (characterized by the imitation of the most successful operators on the market). The phenomenon of imitation was very frequent in the first period of the development of the audiovisual market, after the events that took place in December 1989, when all the new TV stations adopted a generalist attitude. In time, things have changed because the public’s preferences have changed and therefore, specialized TV stations emerged. Now the differentiation can be easily noticed because the target audience is usually different. The attitude towards viewers is very important for the success of a TV station. Taking this aspect into account, we can identify a certain strategy called attracting, maintaining and recovering the audience and another one, production-orientated, called the strategy of indifference. Another aspect of major importance is represented by the public’s exigency which is strongly connected to the quality provided by the respective TV station and to the quality perceived by the public. Hence, we can identify the high exigency strategy associated with high quality TV programs, the medium exigency strategy which is the most frequent and the low exigency strategy which can be easily noticed on the Romanian market because it is successfully applied by OTV. Summing up, we obtain the following typology of market strategies: Table no.2: The typology of market strategies specific for audiovisual services5 Supplydemand relation

Content of environmental relations

Differentiated

Partnerships (preferential relationships, tolerance and cooperation)

Undifferentiated or insufficiently differentiated

Competitive relations

The position of the enterprise as opposed to competition Differentiation

Imitation

The position of the enterprise towards viewers Attracting, maintaining, recovering

Indifference

Market exigency

High exigency Medium exigency Low exigency

2. Marketing mix strategies in the field of audiovisual services The concept of marketing mix was discovered by Neil Borden in 1964 and perfected by McCarthy in 1979. The differentiation regarding products and distribution determined the extension of mix-marketing components. Therefore, we notice the perspective of authors like Valerie Zeithaml and Mary Jo Bitner, who extend the concept to seven components by adding the following: the human component (the personnel and the customer), the material support and the process of creation and delivery. Adrian Payne also 5

Olteanu V., Marketingul serviciilor- o abordare managerială, Ed. Ecomar, Bucureşti, 2003 (adaptare)

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uses seven elements but he replaces the material support with the relation with the customers. Christopher Lovelock has a modified variant of mix marketing; he proposes a unified approach of distribution and product and he separates the price from communications and customer services. Monique Lejeune considers that within the framework of services, a series of modified variables appear and adds three new components: ambience, personnel and customer. Eric Langeard and Pierre Eiglier consider mix marketing in terms of the supply of services, the communication policy, the price policy and the network marketing. Starting from these aspects, regarding the services in the audiovisual domain, we’ll take into account, on the one hand, the classical components of mix marketing, namely the product, the price, the investment and the promotion, and, on the other hand, concepts from modern theories such as the personnel (and especially celebrities and the anchor of the respective TV station), the viewer and the relation with the audience. 2.1. The product policy Satisfying the viewers’ needs is accomplished through the consumption of services which are created and offered by TV stations through a complex process that involves numerous human, material, financial and informational resources. The set of actions that a TV station takes in order to establish its objectives, choose its strategies, program and develop clear measures represents the product policy. In practice, it represents the behavior of the TV station in relation with the environment in which its activities take place regarding the dimensions, structure and evolution of the services which are in fact the objective of its activities. The concept of product is defined as “the set of elements which trigger the demand expressed by the consumer”6. The approach to services imposes a proper perspective concerning the product, a perspective which is mirrored in the concepts of global product and unitary (partial) products. This aspect is present in the audiovisual services field. The global product refers to the interaction between different components, to their effect and utility for the consumer/viewer. Basically, it refers to the actions through which utility is created. These actions take shape in a series of unitary products which are of several types: basic, auxiliary, supplementary and potential. The basic product represents the result of the activities which generate utilities meant to satisfy a certain need; in the case of audiovisual services we refer especially to the need of information and entertainment (these are the most important functions of the Romanian televisions identified by viewers). Basically, in the audiovisual domain the main product is the TV show. The auxiliary product is generated by activities without which the basic product couldn’t exist or its quality would be affected in one way or another. In the case of services provided by TV stations, the quality of the broadcasting signal is an auxiliary product. Obviously, the signal quality influences the way in which viewers perceive a certain TV show. Supplementary products enhance the utility of the basic services and represent an important differentiating element with respect to competition. The price is not an issue on the Romanian audiovisual market where the only pay-TV station is HBO. 6

Florescu C. (coordonator), Marketing, Ed. Marketer, Bucureşti 1992

18


Potential products are generated by activities which ensure originality and are the expression of a high flexibility; usually, by paying, viewers receive personalized services which respond to individual needs different from the basic ones. In the audiovisual field, personalized services represent an impossibility because a television addresses to vast masses of people. However, the need of a certain separation appeared on the market and so, the specialized TV stations emerged. The strategic objectives of the global product policy refer to several essential aspects: quality, productivity, differentiation and balance of market-oriented actions. The quality of audiovisual services is essential; but who decides whether a TV show is good enough: the public or the producer? This is an up-to-date issue on the Romanian market given the fact that the audiovisual offer abounds in TV shows which promote bad taste and ignorance. The TV stations’ excuse is that “this is what the public wants”, but the public can be educated so that TV shows of this kind are left out and replaced by high quality ones. Productivity in the audiovisual field can be measured through the market share which attracts the publicity budgets of enterprises, hence the TV stations’ desire of having a high market share. Being different from all the other competitors should represent a permanent objective of TV stations, given the fact that there is a high risk of imitation. In this sense, innovation is very important. Certain strategies concerning the global product should be established in terms of the realization process of the respective service, the vision according to which this process is developed and its degree of complexity. Two main orientations can be noticed regarding the vision mentioned above: the product orientation and the market orientation. The former concerns aspects such as resource management and permanent quality enhancement of the TV shows. But quite often such an approach leads to “poor sighted marketing” which means remaining in the background of the viewers’ needs. The latter centers around the consumer of audiovisual services and his/her needs. Unfortunately, this represents a frequent excuse of TV stations for the low level of quality of their TV shows. Reducing the complexity of a complete strategy means product orientation through low costs. Enhancing a strategy’s complexity presupposes adding supplementary activities in order to increase the quality and to reach a certain differentiation from all other competitors. Table no.3: Strategic alternatives to the global product policy in the audiovisual domain Development of the TV production process Market oriented (customer/viewer) Product oriented (producer/TV station)

Characteristics of the TV production process a) divergence degree b) complexity degree Low Low High

High

2.2. The price policy Establishing prices, price competition and the way in which consumers perceive the respective prices represent an important issue.

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On the Romanian audiovisual market, the price issue is practically inexistent because TV stations do not require taxes for broadcasting their TV shows. In Romania, the only pay-TV station is HBO. The public television has been frequently blamed for the fact that, even though citizens pay an obligatory tax (with certain exceptions, of course), it still broadcasts publicity and therefore it has more access to financial resources. Practically, the only price that Romanian viewers pay in order to have access to the TV shows broadcast by TV stations is 30 RON per month. 2.3. The distribution policy According to the classical definition, distribution represents a set of activities which take place in a certain space and time that separate production from consumption7. The inseparability and intangibility of services might leave the impression that distribution is almost inexistent in this domain. In reality, the producer and the consumer are often separated in time and space; they may meet because of certain activities. Therefore, distribution represents a set of activities which take place in a certain space and time that separate the producer and the consumer8. In the case of audiovisual services, the producer and the consumer can meet anytime without restrictions because the material support (the TV set) is present in the consumer’s home. However, there are exceptional situations in which the encounter between the demand and the supply on the audiovisual market cannot take place; this may be the case of some cable firms or of the company Electrica. SNR is the company that makes the connection between the operators on the audiovisual market and the viewers or listeners. SNR is one of the main operators on the Romanian communication market. Its basic activity is to broadcast national programs on the radio and on television across the country. This company has recently changed its identity and it is now called Radiocom. The new visual identity aims to update the image of the company, making it more competitive on the communication market. Radiocom means 85 years of history and leadership on the Romanian broadcasting market. In the case of services offered by TV stations, we cannot talk about the classical fluxes of distribution because here there is no actual sale and, implicitly, there are no negotiations, transactions, etc. 2.4. The promotion policy As a variable of the mix marketing, the term of “promotion” suggests the set of activities that impulse the penetration of products/services on the market and in consumption and that stimulate sales9. The characteristics of services can change the activities of promotion. Hence, a series of elements which strongly influence the promotion activity emerge, because it is very difficult to present an intangible offer and which may vary between the moment of promotion and the moment in which the respective offer comes into force. Some of these elements are: exterior elements (landscape, architecture,

7

Florescu C. (coordonator), Marketing, Ed. Marketer, Bucureşti 1992 Olteanu V., Marketingul serviciilor- o abordare managerială, Ed. Ecomar, Bucureşti, 2003 9 Florescu C. (coordonator), Marketing, Ed. Marketer, Bucureşti 1992 8

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geographical position, etc.), interior elements (ambience, personnel, etc.), symbols and interpersonal relations. Given the fact that the offer on the Romanian market increased very much, the services offered by companies in the audiovisual field depend on the promotion activity. The viewers’ perception of the TV station and its programs has the most important role in the promotion activity. A television’s communication system represents the main focus in order achieve success on the market; the most important elements are the physical aspects, the other environments and the personnel. The communication realized by a TV station should be conceptually well organized in terms of its two components: internal and external communication. The former refers to communication within the respective television and among its employees. The latter refers to visual symbols, public relations and especially to the media and even to the external architecture. Any TV station should have some strategic objectives regarding its promotional activity. The general objective of a TV station is to obtain a high market share in order to attract the publicity budgets of powerful companies. Strategic alternatives of the promotion policy in the case of audiovisual services refer to some main aspects such as: offer, demand variability, the role of the promotion activity and the way in which it is developed in time. The offer, viewed as a differentiating element of the promotion strategies, refers to the manner in which the program offer of a TV station is tackled within the framework of the promotion program. Therefore, we distinguish: the strategy of the general offer (used especially in autumn and spring – the two moments when TV stations put forward their new program offers) and the strategy of promoting only certain TV shows (this strategy is more frequent because the message is more easily conceived). Demand variability is visible on the audiovisual market, given the fact that during summer the market share decreases. Depending on the evolution of the demand, the TV stations’ offer changes accordingly. The role of the promotion activity is more obvious on a highly competitive market. The offensive strategy is typical of powerful TV stations which have large budgets and use diverse methods, techniques and instruments for a better promotion which often becomes aggressive. The defensive strategy is used by those who wish to maintain a certain level on the market or in certain circumstances like the apparition of a new competitor. The way in which the promotion activity develops in time is another differentiating criterion. A permanent promotion activity is difficult and expensive not only for the TV station but also for the viewer who feels annoyed by so many messages. The intermittent strategy takes into account seasonal phenomena, certain circumstances and the evolution of the market share. Table no. 4: Strategic alternatives in the promotion policy of television companies Offer - general offer promotion strategy - promotion of certain TV shows strategy

Demand variability - temporary differentiation strategy - temporary undifferentiating strategy

The role of the promotional activity - offensive strategy - defensive strategy

Development in time - permanent promotion activity strategy - intermittent promotion activity strategy

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2.5. Celebrity marketing Philip Kotler remarks the importance of personnel particularly in the domain of services. The success of a company of services depends on the quality of its staff. In the case of companies in the audiovisual domain this aspect is even more conspicuous. The quality of the staff’s activity determines the quality of the audiovisual services. Primarily, we should take into account the personnel that comes in direct contact with the public, those persons who host TV shows and are considered to be “celebrities”. Certainly, the quality of the TV shows does not depend only on the evolution of these celebrities, because, behind the scenes, many others contribute to their success. TV stars are important for a TV station because they usually represent the respective TV show and TV station and because they “sell”. A clear and well organized personnel policy is an important element for the success of a TV station. In order to achieve the best results, a television company has to take into account certain aspects such as: selecting and hiring the most competent candidates, permanent training of the staff, forming work teams on the basis of clear criteria, encouraging initiatives and creativity, communication on a formal and on an informal level. The success on the audiovisual market is the result of team work. So, those who form a team share certain attitudes, feelings, values, abilities and objectives. Cooperation should be based on good communication and trust. The team does not presuppose uniformity; it joins together individuals in order to create a whole which is better than the component parts. Team work is very important for the quality of the audiovisual offer. Viewers have a direct contact with the hosts of TV shows; quite often they are also the producers of the respective TV shows. Hence, the concept of television celebrity emerged. These kinds of persons are famous and have won the public’s sympathy; this is why TV stations invest large sums in the image of celebrities. The main instruments that are used are those of public relations such as: the article, the press conference, sites and special events. TV channels capitalize on the celebrities’ notoriety and try to find new TV celebrities. The image of such persons is difficult to build but important because the public identifies with the qualities of these persons. This is why the moral aspect of the problem is also of great importance. Young people usually try to imitate the models offered by television and unfortunately they sometimes imitate false models. Every TV station has the qualified personnel to handle the celebrities’ PR problems. In this sense the relation with the media is vital in order to convince journalists to write positive things about the respective channel’s stars. There are situations in which the work contract of a public person interdicts apparitions at events which are organized by rival TV stations or press interviews. Celebrities are also promoted on the internet. The first who have created a real cult for TV celebrities are from the PRO trust. They have created the first anchor on the Romanian audiovisual market, namely Andreea Esca. An anchor is TV celebrity who is associated with the TV station that he/she represents. In order to maintain his/her notoriety the respective person’s behavior has to be flawless. The anchor participates at important events and is involved in image campaigns. TVR also has an anchor, namely Andreea Marin. Antena 1 did not apply the same strategy, but tried to build the image of TV couples such as: Radu Coşarcă- Mona Nicolici, Alessandra Stoicescu – Lucian Mândruţă, Andreea Berecleanu- Andrei Zaharescu. To sum up, let us mention the main strategies applied by TV stations concerning their celebrities:

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• •

The anchor (or the main celebrity) strategy: a television concentrates its efforts in order to promote a single celebrity so that the public associates with the respective television; The anchor and other celebrities strategy: the television promotes the anchor but also encourages other celebrities; The TV couples strategy: those who form a couple on TV do not necessarily form a couple in real life, but the main idea is that the two persons have to complete each other; The celebrity building strategy depending on several domains: news, sports, weather, etc.; specialists try to build the image of many celebrities who have to represent the respective TV channel. 2.6. The viewers and their needs. The TV channel – public relation

According to the marketing viewpoint, the whole process of offer realization should be based on the viewers’ needs. An anticipative analysis should take into account the following aspects: the consumer’s level of satisfaction or dissatisfaction, the consumer’s behavior towards the media product, the contact with the product and developing a sense of fidelity towards the TV shows of the respective TV channel. Satisfaction or dissatisfaction – generally, it is thought that if a consumer is satisfied with the audiovisual services, then he/she will continue to watch the respective TV shows and, moreover, he/she will share his/her positive experience with other consumers. If a consumer is not satisfied, then he/she will change the product and the respective TV channel. Satisfying the viewers’ needs is the main objective of a TV station; permanent research takes place in order to identify the public’s preferences. Table no. 5: Model for satisfying the audiovisual consumer Anticipated performance ↓ Agreement / Non-agreement ↓ Satisfaction / Dissatisfaction

Actual performance ↓

The non-agreement between expectations and actual performance can be: • Positive – when the actual performance is better than what is expected; • Negative – when the actual performance does not raise to the consumer’s expectations and generates the consumer’s dissatisfaction; • Neutral – when the actual performance is the same as the anticipated performance. Research regarding the audiovisual consumer’s dissatisfaction and his/her reactions lead to the following conclusions: • Dissatisfied consumers come from upper social classes; • There is no obvious connection between the consumer’s personality and his/her dissatisfaction;

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• • •

The consumer’s complaints are more and more intense depending on the level of dissatisfaction; If the TV station is interested in the consumer’s feedback, the probability of complaints increases; When the dissatisfaction is not the consumer’s fault, the probability of complaints increases;

The audiovisual consumer’s behavior towards the proposed offer refers to the contact between the viewer and the proposed TV shows. The contact may be direct (the respective person watches a certain TV shows) or indirect (friends, neighbors, media, etc.). Another important aspect is the viewers’ fidelity towards TV brands. Nowadays, under the influence of certain factors such as the offer’s variety, information about offers, similarities between audiovisual offers and time pressure, the consumer’s fidelity towards a certain brand decreased. A viewer is loyal to a certain TV show if he watches it repeatedly and he/she is convinced of its value. Brand fidelity in the audiovisual field represents the consumer’s inner commitment to watch a certain TV show repeatedly. Fidelity differs from repeated watching; the latter refers to a mere manifestation and lacks motivation. The characteristics of the audiovisual product can influence the viewer’s behavior, such as: • Compatibility – represents the way in which the audiovisual product corresponds to the consumer’s beliefs and system of values; • Advantages for the consumer – the consumer receives certain advantages which influence him/her to watch the respective TV show; • The relative advantage – represents the fact that a certain TV show has a major competitive advantage in relation to other similar TV shows; this relative advantage is an important characteristic which determines whether the viewer will watch or not the respective TV show or even watch it again and so, becoming loyal to its brand; • Symbolism includes the significance of the audiovisual product for the consumer and his/her experience in watching the respective product; research shows that watching certain TV shows actually depends more on their social and psychological significance than on their real utility. Bibliography: [1]. [2]. [3]. [4].

Cetinǎ, R. Brandabur, Marketingul Serviciilor, Ed. Uranus Bucureşti 2004 P. Dǎtculescu, Cercetarea de marketing, Ed. Brandbuilders, Bucureşţi, 2006 N. Guéguen, Psihologia consumatorului, Ed. Polirom, Bucureşti 2006 M. Ioncicǎ, Economia Serviciilor abordǎri teoretice şi implicaţii practice, Ed. Uranus, Bucureşti 2006 [5]. V. Olteanu, Marketingul Serviciilor, Ed.Ecomar, Bucureşti 2003 [6]. M. Papuc, Cercetǎri de Marketing, Ed. Universitarǎ, Bucureşti, 2007 [7]. N. Stanciu, P. Varlam, Managementul Televiziunii, Ed. LIBRA VOX, Bucureşti, 2001

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EFFECTIVE MARKETING POLICY GUIDELINES FOR ROMANIAN INTERNET SERVICE PROVIDERS Lecturer Tudor EDU, Ph.D Romanian –American University 1B, Expoziției Avenue, Sector 1, Bucharest tudoredu@yahoo.com

Lecturer Costel Negricea Ph.D Romanian-American University 1B, Expoziţiei Avenue, Sector 1, Bucharest negricea@yahoo.com

Associate Professor Nicoleta Rossela Dumitru, Ph.D Romanian American University 1B, Ezpoziției Avenue, Sector 1, Bucharest nicoletad01@yahoo.com

Abstract: The ISP is the entity specialized in the provision of the Internet services. Usually, such an entity provides the entire range of Internet services, which can be divided into two major groups: data transmissions and web services. The ISP has a very important place in the marketing environment of the modern organization being found within the close-in environment of the organization amongst the providers of the other services. The modern company has a relationship with its ISP at least as important as the ones with its bank, transporters or insurance companies. Nowadays, the question is not whether the online technologies are necessary for the company but how these technologies are implemented by the company (Porter, 2001, pag. 62). To have a presentation web site and at least one email address is something ordinary for any organization. Key words: marketing objectives, strategies, tactics, survey JEL Classification: M31 The coordinates of the marketing policy which can be taken into consideration by the Internet service providers can be classified in marketing objectives, strategies and tactics. The main marketing objectives can be summarized as follows: increase of sales in comparison to a prior period of time; increase of market share; increase in number of subscribers; improvement of client loyalty.

25


The market strategy criteria which can be approached by the Internet service providers can be grouped as follows: market dynamics; market structure; market requirements; market changes, competition (Florescu, et al., 1992, pag. 282); company’s reaction to the physiognomy and dynamics of the business environment; evolution of demand and development strategies (Balaure, 2000). The client is the main element of the marketing policy. The client or the client base is the engine of the activity of any company acting on the Internet market. The providers carefully pursue the loyalty of their clients, because this is the only way they can count on them for the business development. An ISP can make use of 5 policies of the marketing mix: Product, Price, Distribution, Promotion and Network of Nodes. 1.

Product Policy

With regards to the global product made up of the following partial products: communication channel, equipment, personnel and client, the Internet service provider could set up the product objectives on three directions: service quality; adaptation of the services to the technical progress encountered in the Internet field; differentiation of the provided services from the ones provided by the competition. The product strategies could be grouped in: - the view in which the process is performed (Olteanu, 1997, pag. 182); - assortment dimension and structure; - innovation and quality (Florescu, et al., 1992, pag. 324) . The main instruments which can be used by the providers could be ranked in: - ways in which the services can be sold; - approaches for innovation; - approaches for service improvement. Product objectives, strategies and tactics for the partial products The main objectives, strategies and tactics which can be used by the Internet service providers for the partial products can be divided in: - communication channel: monitoring and ensuring the optimum transport capacity; - equipment: maintaining, improvement and replacement - personnel: recruitment and training - client- participant in the service: encouragement of the client to participate in service provision (Olteanu, 1997, pag. 200). 2.

Price Policy

The Internet services’ price is influenced by a series of factors, such as: - type of infrastructure; - dimension of communication channel; - equipment type; - technical support; - promotion. The price objectives could be summarized in close correlation with: - the company’s attitude towards the future development; - the target segment approached by the company;

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- the company’s position towards innovation. The criteria for the price strategies and tactics can be grouped in: - price level; - ways in which the prices are formed; - price variability and flexibility (Florescu, et al., 1992, pag. 348-353); - price standardization and personalization. 3.

Distribution Policy

The specificity of the distribution of the Internet services can be found in the peculiarities of services in general (perishability, variability, inseparability and intangibility) and in the peculiarities of the Internet services. Due to the fact that most services are “consumed� when the provider meets the customer, their distribution is a lot different than the one encountered in goods with respect to the delivery process and distribution channel. The delivery process comprises all the stages involved in the sale of the services: - the contact between the client and the provider, - negotiation, - signing of contract, - installation and delivery of service. Distribution objectives, strategies and tactics The objectives, strategies and tactics will be approached on three directions: - venue of service provision, - delivery conditions - distribution channel. Regarding the venue of service provision, the sales process must be adapted to the market changes, beginning with the initial contact with the client, continuing with negotiation, contract signing, service delivery and after sale monitoring of the service. Regarding the delivery conditions, the provider must be careful with the aspects perceivable by the client which can affect the service quality: the way in which the service is sold (prepaid or subscription), the technical support and the type and dimension of the infrastructure. Regading the distribution channel, the provider can sell through direct channels and/or through intermediaries. Regarding the venue of service provision, an attention should be paid to the flexibility strategy of the distribution (Florescu, et al., 1992, pag. 378), with the following strategic options: high, average and low flexibility. Regarding the delivery conditions, the provider should approach the strategy of logistics (Florescu, et al., 1992, pag. 378) from goods adapted to the specificity of the Internet services, meaning: - ways of selling- with two major strategic options: prepaid and subscription; - technical support- with three options: performed by the company, outsourcing and both; - infrastructure type and dimension- here we talk of the Internet infrastructures available for the client. The distribution channel should be approached considering the following dimensions: - distribution channel dimension

27


-

degree of participation of the provider in distribution (Florescu, et al., 1992, pag. 378). 4.

Promotion Policy

The online environment- an alternative to the classic marketing communication or its future? The online technologies, online applications and electronic communication led to the creation of a new business way, a new meeting and communication environment or even a new lifestyle. -

The online marketing communication instruments can be grouped in: web sites, forums, blogs, banners, pop-ups search engines.

The promotional approaches of the Internet service providers must be correlated with the promotional endeavours of the companies which use online instruments. The Internet providers are the companies ensuring the necessary support for the online advertising. Promotion objectives, strategies and tactics for the Internet service providers The promotion objectives can be classified in: - company’s image - promotion of products and services. The promotion strategies can be split into: - image improvement or preservation and service promotion; - target market approach, with three strategic options: concentrated, differentiated and undifferentiated strategy (Balaure, et al., 2000, pag. 457); - role of promotion, with two strategic options: offensive and defensive strategy; - planning and executing of the promotion, with three strategic options: planning and executing of the promotion by the company, through outsourcing and both; - duration, with two strategic options: permanent promotion activity and intermittent promotion activity (Florescu, et al., 1992, pag. 409). The instruments used by the Internet providers can be grouped in: instruments provided by the online environment: forum, blog, podcasting and banner advertising and instruments borrowed from goods and other services: advertising, sales promotion, events, public relations, sales force, brand and direct marketing. 5.

Network of Nodes or electronic communication Policy

A network is comprised of computers and network equipment and it is considered to be more important and complex as it has a greater number of computers. Concepts and technologies found in the electronic communication with implications on the quality of the delivered services are many. Amongst the many normes, concepts and technologies which influence the consistancy of the electronic communication, the most important are probably the BGP and the „peer-to-peer� technology.

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BGP- Border Gateway Protocol- is an Internet protocol which facilitates (www.cisco.ro) to the groups of equipment to place at the disposal of everyone routing information allowing for direct routes. The „peer-to-peer� technology refers to the creation of Internet connections in which the computers should have an equal status. Each computer will host information which will be accessed as quickly as other information found on the other computers. Objectives, Strategies and Tactics which can be used in the Policy of the Network of Nodes The main objective is the facilitation of the interconnection of the provider with other providers. The interconnection is the engine of the business development of any Internet provider. We can also include other two objectives which are found also in the Product Policy: connection speed and consistency. The strategies and tactics used here should include three distinct areas: - number of Internet connections, - data traffic improvement - data traffic optimization. In order to test the above-mentioned marketing coordinates, a random marketing research was performed amongst the Internet Service Providers. The objectives were to identify the strategic criteria taken into consideration by these companies when planning their marketing policies. The sample was made up of 42 Romanian Internet service providers and the data was collected through a field questionnaire subsequent to a telephone appointment or through an e-mail questionnaire, case in which the respondent was assisted through a chat program in order to clear any misunderstandings. The objectives of this research were met and the projected hypotheses were mostly confirmed. Anyway, not all the strategic options for each criterion were selected by the respondents. For example, in the case of the market dynamics criterion, the option of business shrinking was not selected at all. This situation is completely understandable because the Internet services field is undergoing a steady development. The conclusions for each strategic criterion: 1.

Market strategy a.

b.

c.

market dynamics- most of the companies (32 out of 42) mentioned that their business grew in comparison to the previous year, while 10 providers mentioned that their business stayed at the same level. Also, 41 companies consider that the market will continue to grow, while only one considered otherwise. market structure- all three strategic options were selected: concentrated (10 companies), differentiated (22 companies), undifferentiated (10 companies). The Internet Service Providers segment the Internet market in almost all cases in companies and individuals. market changes- all three strategic options were selected: active (9 companies), adaptive (27 companies), passive (11 companies). As it can be observed, most companies adopted their decisions so they would face

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d.

e.

2.

Product strategy a.

b.

c.

3.

the best possible way the changes occurred in the environment. Also, a few providers chose more than one option according to different categories of services in their portfolios. market requirements- the three possible options were considered by the companies: high requirements, medium requirements, low requirements. Also, the scores obtained through the use of the semantic differentials show different degrees of concern from the companies with regards to the requirements which indicate a deeper segmentation of the Romanian Internet services market. Interesting is the fact that the score for the three scales is “Favourable”. The highest score (4,2) and the biggest number of answers were counted for the option “high requirements”. market competition- both strategic options (offensive and defensive) were selected by the respondents. Anyway, the offensive strategy was chosen by most of the companies (31 providers). This score is connected to the one obtained for the market dynamics.

product assortment- considering the Internet services to be a global product made up of four partial products: communication channel, equipment, personnel and client, the objective was to find out the opinions of the respondents towards the improvement, maintaining and reduction of these products or relationships with these partial products. The scores show that most options went towards the improvement (62%), 36% towards maintaining them and only 2% towards their reduction. innovation- the score obtained through the use of the semantic differential- 4,40- between “Favourable” and “Extremely Favourable” reflects the significant interest of the providers for innovation. From the total number of options, 49% of the respondents mentioned their interest for the “Assimilation of the new products/services/actions”, 42% for the “Improvement of the existing products/services/actions” and 9% for the “Preservation of the existing products/services/actions”. quality- 55% of the options were directed to the personalization of the services for each different client or group of clients; almost 34% of the options refer to the standardization of the services on one or more levels of quality and 11% of the answers mentioned the use of only one standard of quality for all services and clients. Some of the respondents mentioned more than one option according to the peculiarities of the services in their portfolio.

Price strategy a. b. c.

price level- 34 respondents out of the 42 mentioned that their prices are “moderate”; 6 said “high” and 2 “low”. price diversification- the scores show that the providers are inclined to use different prices for the same service (29 “YES” answers and 13 “NO” answers). price mobility- the score- 0,785/ AGREE- obtained through the use of a Likert scale shows that providers are inclined to change their prices at

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d.

e.

4.

Distribution Strategy a.

b.

c. d.

e.

5.

certain intervals. Interesting is the distribution of the answers: “Totally Agree”- 9; “Agree”- 20; “Indifferent”- 9; “Disagree”- 3 and 1 for “Totally Disagree”. Also here, another objective was to find out the criteria taken into consideration when setting up the price. The scores were the following: 271 points for setting the price according to the “costs”; 250 points for setting the price according to the “demand”; 302 points for setting the price according to the “competition” and 20 points for setting the price according to other criteria. A question referring to- “A better quality requires a higher price” was introduced for a better understanding of the way the respondents evaluate the price level. The score shows that 76% consider the assertion to be correct which means that ¾ of the respondents associate a higher quality with a higher price.

distribution channel dimension and involvement of the company in distribution- all the 42 respondents sell their services directly; 7 sell through intermediaries owned by them; 13 sell also through intermediaries not owned by them. distribution size- out of the 20 providers which sell their services through intermediaries, 2 sell through intermediaries from the same field with the provider and other fields; 15 sell through intermediaries from other fields and 3 sell through intermediaries from the same field with the provider. The conclusion is that the providers selling through intermediaries from the same field use a selective strategy and the ones selling through companies from other fields use a selective and an extensive strategy. Exclusivity is very seldom encountered in this field, because intermediaries like to have more options for their clients not being very willing to work with only one provider. distribution control- the 18 respondents selected as follows: “Total control”- 2; “High control”- 4; “Average control”- 3; “Low control”- 5; “No control”- 4. distribution control- 40 providers consider that their sales are adapted to the market change. “High flexibility” was selected by 15 companies; “Average flexibility” was selected by 26 companies and “Low flexibility” just by 1. logistics- were considered 3 criteria: type of infrastructure- dial-up: 16 companies; cable: 17 companies; fiber optic- 31; wireless- 26; XDSL- 8; UTP- 27; Mobile networks- 2; satellite- 1; type of sale- subscription- 41 companies; prepaid- 1 company; provision of technical support- by the company- 35 providers; through outsourcing- 1 provider; by the company and through outsourcing- 8 providers.

Promotion strategy

31


a. b.

c.

d. e. f. 6.

global objectives of promotion- 35 providers mentioned “image promotion”; 23 mentioned “product promotion”; 4 mentioned market penetration using an existing well-known brand. duration- the score- 0,64- obtained through the use of a Likert Scale shows an opinion close to “AGREE” with regards to a permanent promotion activity. Anyway, 8 companies did not agree with the permanent promotion and 7 were indifferent. role of promotion- 36 respondents selected the “offensive” strategy and just 6 the “defensive” strategy. The scores are very close to those registered for question 10, where 31 providers mentioned the “offensive” strategy. market structure- the options were split as follows: “concentrated” strategy- 8 providers; “undifferentiated” strategy- 10 providers and “differentiated’ strategy- 24 providers. which entity runs the campaign- none of the providers mentioned just outsourcing; 23 mentioned running the campaigns by themselves and 19 by themselves and through outsourcing. The most frequent used promotional instruments are: press, web site, sales force, price reductions, posters, flyers.

Network of Nodes or electronic communication strategy a. b. c. 6.

number of Internet connections- 71% of the providers use more than one connection (between 2 and 5) and 29% use only one Internet connection. data traffic improvement- 61,9% of the providers use “bgp” protocol (between 2 and 5 connections) (meaning alternative routes for data) and 38,2% do not use “bgp” protocol. data traffic optimization- 16 respondents use the “peer-to-peer” protocol (meaning straight connections between providers).

Conclusions

The marketing coordinates presented in this paper can be successfully implemented by the IPSs . They cover the entire marketing approach, comprising strategic and tactical options and they are the outcome of the tailoring of marketing aspects used in other services to the peculiarities of the Internet services and of the development of marketing approaches especially for this type of business, such as the network of nodes. Bibliography: [1]. [2]. [3]. [4]. [5].

Balaure, V. et al., 2004. Marketing. Bucuresti: Ed. Uranus Florescu, C. et al., 1992, Marketing, Bucuresti: Ed Expert Olteanu, V., 1992, Marketingul Serviciilor, Bucuresti: Ed. Uranus Porter, M., 2001, Strategy and the Internet, Harvard Business Review www.cisco.ro

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COORDINATES OF BANKING SERVICES QUALITY MANAGEMENT Nicolai Laurenţiu HRENIUC, PhD Candidate Academy of Economic Studies, Piața Romana Square, Bucharest Abstract: In the field of services, quality is, in general, defined by the client and the management ensures the overfulfilment of the client’s demands and expectations. The quality of services implies two essential aspects that a manager has to take into account: the client’s satisfaction and the absence of the errors made by employees. Introducing a system of quality management has the goal of satisfying the clients and surpassing their expectations. Such a system has to be dynamic, which makes it adaptable to the clients’ needs, demands and expectations. Principles of quality management in banking institutions have to be : customer orientation, leadership, personnel involvement, procedural approach, system approach to management, continuous improvement, factual approach to decision, mutually beneficial supplier relationships. Key words: Banking Services, Quality Management, The Contact Personnel, Top Management. JEL Classification: M12, M31, M54 In the field of services, quality is, in general, defined by the client and the management ensures the overfulfilment of the client’s demands and expectations. The goal of quality management regarding services implies that the client’s expectations are understood, concerning quality, and that a plan and a proactiv process are designed in order to achieve this goal. The origin of quality objectives is revealed by the clients’ needs; this is why the scientific basis of quality management has to be market-oriented. The strategic quality objectives have a major impact on the process of services accomplishment and of offer in general, ensuring the performances of the final service and of the processes which make it up. The quality of services implies two essential aspects that a manager has to take into account: the client’s satisfaction and the absence of the errors made by employees. As far as the clients are concerned, the higher the level of satisfaction and initial expectations achieved, the higher the quality of received / bought services. Moreover, the absence of the errors made by employees determines a higher quality of the respective offer. Introducing a system of quality management has the goal of satisfying the clients and surpassing their expectations. Such a system has to be dynamic, which makes it adaptable to the clients’

33


needs, demands and expectations. At the level of the enterprises, the quality dependson the activities developed on three hierarchical levels: ! top management, which established the quality strategy, the policy and the quality objectives on long term; ! the department (head of devision) where are established the tactics and the measures of strategy enforment through concrete activities; ! the accomplishers (team leaders) who act at an operational level and determine the accomplishment of the quality. Banking quality policy must be consistent with the overall policy and strategy and is bank- and customer satisfaction oriented, it takes into account the expectations and needs of all stakeholders. To fulfill this mission, an approach to quality management standards is recommended, based on the SR EN ISO 9001:2008 standard. Bank's top management is committed to guiding all resources and ensuring the framework for all activities, taking into account the following: • improve support mechanisms, given the financial crisis and global economic conditions, improving projects of national importance, in accordance with government policy and strategy; • orientation towards meeting the current and future needs and expectations of customers; • promote the image of the respective bank; • institutional development of the bank by permanently adapting the organization to the requirements of a modern and dynamic banking and financial institution; • improve the human resource component in accordance with the requirements of permanent innovation and change in the bank‘s activity; • continuous improvement of the quality management system within the bank.

Pillars for resource orientation Mechanisms for sustaining major projects

Customer orientation

Promoting the bank’s image

Institutional development

Human resource improvement

Quality management system improvement

Fig. 1: The Pillars on Which Top Management Must Focus Their Resources ● Improvement of support mechanisms, given the financial crisis and global economic conditions, improving projects of national importance, in accordance with government policy and strategy The bank, seen as a dynamic and active promoter of the Romanian business environment and international transactions, through financial - banking and specific assurance tools will guide the work to improve support mechanisms - in the financial crisis and global economic conditions – for Romanian exports and projects of national importance, to strengthen, in line with government policy and strategy, a competitive

34


Romanian economy. The strategic priorities of this period are considering, on the one hand, the economic and financial context and development objectives of the Romanian Government, and the available sources on the other. ● Orientation towards meeting the current and future needs and expectations of customers should particularly include the following: " SMEs, with high potential for accumulation and development, for projects that contribute to the rise of competitiveness and adaptation to EU standards; " corporations for specific large projects. Respecting the provisions of SR EN ISO 9001:2008, the activities of any bank will be based on the main principles of the quality management system, customer orientation and increasing their satisfaction and will be focused on: ~ Creating a climate of trust and mutual respect between customers and the bank , ensured by objective and civilized professional behaviour of all staff in their interactions with the customer; ~ Ensuring equal treatment of customers, a goal according to which bank employees have a duty to apply the same legal and regulatory regime in the same or similar circumstances; ~ Insuring quality of service through active participation in tasks, decision making and implementation in practice for customer and partner benefit, in order to achieve an efficient overall activity; ~ Openness and transparency towards customers, a principle according to which the activities of bank employees in relation to their respective customers are monitored; ~ Shortening the duration of customer records analysis; ~ Fast and reliable services for the operations performed by clients; ~ Timely responses, flexible and relevant to customer requests. Any bank should be concerned, at all times, to develop lasting relationships with customers, aiming to increase their satisfaction by: ~ Development of financial services and banking products and flexible tailor to anticipate market needs and customer requirements; ~ Identify opportunities for collaboration with the banking and financial institutions, business organizations and private organizations, to support exports, Romanian business environment development and support international transactions; ~ Ensuring operational efficiency through optimal operation of the IT system, the competence and efficiency of staff, both in the front office and back office; ~ Ongoing maintenance and improvement of the centralized bank customers database; ~ Continue to maintain a good communication with customers through staff at all the internal structures involved. ● Promoting the bank’s image Strengthening the position and active factor role of the bank should be reflected in the business image and in the bank‘s communication strategy.

35


Particular attention should be paid to active promotion of products and services operators, local and central government, including their subordinate institutions and credit and insurance institutions. To raise awareness of the role played by the products offered have and to conduct programs and projects of national and regional importance, a comprehensive program to promote all the specific products should be ensured, in order to increase their understanding and access by operators . In this respect, to improve communication, the following measures should be considered: ~ Analyzing and improving the flow of documents in the bank to reduce the decision process duration; ~ Increasing the volume of customer information sent through the site; ~ Improving the interactive operations of the site outside the bank to increase the fluidity and information circuit from and to customers, to reduce response time on customer requests; ~ Enhance media cooperation for the bank; ~ Improving Internet Banking, to ensure the fast, safe and effective way of establishing operations for customers anywhere, and at any time. ● Institutional development of the bank by permanently adapting the organization to the requirements of a modern and dynamic banking and financial institution Any banking institution must pay particular attention to innovative development of the institution both in terms of organization and infrastructure, while improving the regulatory framework governing its activities, risk management and adaptation to the requirements of specific national and EU legislation . Given current market conditions, special attention will be paid to credit risk. Also , efforts will be made to develop and strengthen the regional network and to increase the activity of existing regional business units and implement concrete measures of involvement in specific marketing actions, promotion and collaboration with local bodies, to develop the regional business environment. ● Improve the human resource component in accordance with the requirements of permanent innovation and change in the bank‘s activity The human resources policy must be based on fairness and equal opportunity for all employees, they are evaluated and rewarded based on competencies and achievement of individual/collective objectives Recognizing that the organization's main resource is the staff, the management team is constantly concerned with training and motivation, as an essential tool for unlocking the full potential of the bank. In this sense, the opinion of Richard Dow, marketing specialist, is relevant: “The four Is of services are: individuals, individuals, individuals and individuals”. The professional training program must be designed and reoriented in order to correlate it with the needs identified, both at the banking system level and within the bank's internal structures. It is also necessary that each organizational structure continues in the process of employee awareness on related topics: - the quality management system - the internal regulatory system

36


- general banking - activities specific to each internal structure. However, we should take into account the fact that the personnel does not have the same role in a banking institution. Its role is determined by the frequency with which it comes in contact with the client (permanently, periodically, occasionaly, etc.). Therefore, the personnel can be clasified into contact personnel, those who make modifications, those who influence and those who are isolated. # The contact personnel represents that category of the staff that comes permanently in contact with the clients, being the accomplishment personnel, that makes the service or a main part of it. The contact personnel is an important element of differentiation for similar services and its influence is reflected in the personalized services (technique of adapting the offer to the particular demands of each client). Table 1: The main competences and responsabilities of the contact personnel Competences ! comercial competences ! technical competences ! relational and communication competences ! institutional competences

Responsabilities ! selling the respective service ! accomplishing the service ! efficiently administrating the service through gestures, verbal expressions, etc. ! the identification with the respective enterprise Source: Dupont, Frédéric, Management des services, Editions ESKA, Paris, 2000., p.57 ! Those who make modifications are the category of personnel that comes periodically in contact with the client (secretaries, receptionists, etc.). They help the accomplishment of the service and that is why they have to be selected and trained so that they know the firm’s strategies and participate in them. ! Those who influence have a special role in prepairing the conditions for a good development of the service (leading and research personnel, etc.). ! Those who are isolated (indifferent) are the persons who don’t come in contact with the client or they do, but by hazard. They ensure the support necessary for the development of the service in good conditions. The activity of this category is mirrored in the quality of the service accomplishment (persons from the supply department, etc.). ● Continuous improvement of the quality management system within the bank The policy and quality objectives are aimed at continuous improvement of the quality management system and maintaining its certification. This can be achieved by: •

• • •

the continuous deepening of training, internal quality audits and analysis of all aspects of their implementation and enforcement of the provisions of quality standards and documentation requirements related to the quality management system; consultation with internal and external publications on the issue of quality management; attending seminars, conferences and symposiums on the topic of quality management; increasing training on the quality management system subject;

37


training of internal quality auditors and participation in training courses organized by institutions authorized and certified and training of all newly hired employees in leading positions of internal structures, having the responsibility for process and quality, and employees designated responsible for quality within the individual internal structures; ensuring permanent correlation between the provisions of the normative documents and work procedures to those of the Quality Management Manual, general procedures and specific procedures related to the quality management system; continuous adaptation of the quality management system (QMS) and QMS documentation and organizational changes made to the bank so that the QMS forms a dynamic and flexible tool for institutional development.

In applying these principles to the business orientation and understanding the importance of focus on customer satisfaction and performance, the management of banking institutions should be actively involved and support the maintenance and continuous improvement of the quality management system in accordance with the requirements of SR EN ISO 9001:2008 . In accordance with this goal, a bank should work towards achieving the following objectives: !

! !

!

!

!

Providing competitive products and services, broadening the customer base and achieving a minimum customer satisfaction index of 85% in each territorial unit, reducing response time to customers and differentiated customer approach of large companies, compared to SME type customers . Active involvement of all structures in achieving bank business development under the Bank strategy and Sales plan, while seeking increased efficiency and quality of work of each employee. Promote bank products under the marketing plan, increasing awareness and access to bank products by operators, by organizing events such as: Customer Day, quarterly workshops, promotion, target groups, messages regarding the bank’s activity and the range of products it offers, through advertising campaigns, involving the appearance in the media and on the internet of commercials, articles and interviews Development of relations with the banking and financial institutions, business associations and business organizations to identify opportunities for supporting exports, the Romanian business environment and support international transactions, and conclude and annualy implement agreements with financial and banking institutions. Increase the staff performance and involve at least 30% of bank staff in the annual training, including quality management training. Participation of employees involved in the sales, analysis and monitoring in at least two courses / training activities per year on topics specific to their activities. Improving cooperation between territorial units and structures in Central fluidity and efficiency for general activity, establishment of a functional reporting relationship between the divisions of branches corresponding and central departments, implementing an electronic feed to grant approval of products for SMEs.

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!

Improving the work environment and infrastructure by developing new banking software functionality and an efficient management of assets, upgrading the Internet Banking service offered to customers; ! Continuous improvement of the quality management system through continuous monitoring compliance with the provisions of relevant documentation of the quality management system according to SR EN ISO 9001:2008 requirements and ensuring its consistency with the provisions of the normative documents and work procedures and organizational changes drafting the new edition of the documentation of quality management. In conclusion, for any banking institution to be managed and operate efficiently, its activities should be coordinated and monitored in a systematic way based on eight quality management principles, which we summarized in the following table: Table 2: Principles of Quality Management in Banking Institutions Principles of Quality Management in Banking Institutions Customer orientation Leadership

Personnel involvement Procedural approach System approach management

to

Continuous improvement Factual approach to decision Mutually beneficial supplier relationships

Details Organizations depend on their customers and therefore should understand their current and future needs, should meet customer requirements and should strive to exceed their expectations Leaders establish unity of purpose and direction of the organization, and should establish and maintain the internal environment in which staff can become fully involved in achieving organizational objectives Staff at all levels is the essence of an organization and involvement of all abilities allow it to be used to the organization’s benefit. The desired result is achieved more efficiently when activities and related resources are managed as a process Identifying, understanding and managing related processes as a system contributes to the efficiency of an organization in achieving its objectives. Continuous improvement of overall performance of an organization should be a permanent objective Efficient decisions are based on data analysis and information. An organization and its suppliers / customers are interdependent and a mutually beneficial relationship increases the ability of both to create value.

The scientific basis of quality management of the banking services has to ensure the modalities necessary for obtaining the client’s satisfaction. In this sense, organizations have to know the way in which the clients perceive the products and services’ quality, the level of quality that the clients expect from the organization and the competition in the

39


respective domain of activity. The following aspects have been revealed by research regarding the principles of client-oriented quality management: • the quality has to be the same in all the banks’ activities; • the constant quality level cannot be achieved without the implication of all the organizations which contribute to the offering of the respective services; • satisfying the clients/beneficiaries implies a permanent communication with the clients and with the logistic chain of services; • the quality of services cannot be useful if it is not perceived by clients. The quality of banking services is the result of comparing the clients’ expectations with the experience that the client has during the service accomplishment. Therefore, quality is defined by clients, they appreciate the good, mediocre or bad quality. Other appreciations are irrelevant and insufficient. The starting point in perceiving the service quality is the way in which the service accomplisher fulfils the service in accordance with the client’s expectations. Quality cannot be a goal in itself; it has to be based on the clients’ desires and necessities. Moreover, these desires being subjective, it is difficult to determine the quality of services from an objective point of view. The clients’ exigencies are higher and higher and sophisticated, which implies financial efforts from service accomplishers in order to identify and achieve these exigencies. A firm has to always take into account the efforts made to improve the quality of a service and the financial effects of the usual result. Each employee of a service company contributes in a certain degree at the positive or negative perception of quality. During the service development, a reduced number of persons can be involved, but their activity also depends on the rest of the employees who do not have a direct contact with the public and who are also responsible for the delivered quality. The entire personnel of the company contributes to the quality formation and if a certain employee does not fulfil his/her tasks approprietly, the respective service will be affected. Ensuring a service of at least an acceptable quality is in all cases mandatory, but insufficient in the situation in which a banking company wants to excell in the domain of services. Obtaining a very good quality should be the objective of every bank that wants a solid reputation and long-term relationships with its beneficiaries. If the quality of a service is not appreciated approprietly by the company, the first issue is to determine the causes. An explanation would be the low level of the actual service accomplishment or a negative experience of the consumer during the activity of service delivery. So, situations can appear in which the commercial exaggerates the company’s promises and a certain segment of consumers repond to that commercial, consumers that have higher expectations. Because the banking institutions influence the expectations’ level through their implicite and/or explicite promises, an important aspect concerning the achievement of a certain equilibrium between the bank’s offer and the consumers’ expectations is respecting the promises that were made. Companies have higher chances of success when the promises reflect the real quality of the service. In the domain of services, where in the majority of cases there is no control of the quality before the accomplishment of a service, the client also experiments certain errors. As a result, managers have to identify the causes that can prevent the activity development in conditions of quality ensurance. The main errors that have to be avoided by the companies in the domain of services are the following: not identifying or wrongly identifying the consumers’ needs, errors in the formulation of quality standards, errors in designing the service, inappropriate leading methods.

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[1]. [2]. [3].

[4]. [5]. [6].

Bibliography: ! E.A. Budacia (coordinator), L.C.G. Budacia, NL Hreniuc, A. Perju, L.G. Tănăsoaica, Services Management, "Universitară" Publishing House, Bucharest, 2010 ! I Cetina, R. Brandabur, Constantinescu, Services Marketing- Theory and Applications, Uranus Publishing House, Bucharest, 2006 L. Croitoru, Romania's economy and the economic crisis. Where do we stand? Presentation on the occasion of the Second edition of monetary policy Colloquium, organized by the National Bank of Romania on: Facts and Illusions of the Economic Crisis, 04/30/2009 ! Dubrin, Essentials of Manangement (7th Edition), Thompson, South Western Publishing House, 2006 ! N.L., Hreniuc Considerations on the Organization of the Banking Sector, Economic Tribune magazine, no. 14/2010 ! M. Isarescu, The International Financial Crisis and Challenges for Monetary Policy in Romania - Dissertation presented at the title of Doctor Honoris Causa of Babes-Bolyai University Award, Cluj-Napoca, 26.02.2009!

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BRAND BUILDING – AN ESSENTIAL MARKETING ACTION Lecturer Diana Soca Ph.D Romanian-American University 1B, Expozitiei Avenue, Sector1, Bucharest soca_diana@yahoo.com Abstract: A brand strategy is essentially an approach that guides every aspect of a business. It must do so that the brand corresponds to the four D: desired by the consumer, deliverable, distinct from the competition and durable over time. It is a model that tells you both how to run a business and how each customer interaction with the brand must look like. Key Words: brand product, brand strategy, brand equity, powerful brands JEL Classification: M 31

"A brand is a name, term, sign, symbol, a drawing or a combination of these elements with the aim of identifying the goods or services of a seller or group of sellers and differentiate those goods or services from the competition" – this is how the American Marketing Association defines the concept of brand. In other words the brand includes those items that added to a product differentiate it from other products that meet the same need. These elements of differentiation can be functional, rational, tangible, in connection with product performance or they may be symbolic, emotional, intangible assets in connection with what the brand represents. The key to success in developing a brand is convincing consumers that there are relevant differences between brand products or services in a category. The differences between brands are often about the attributes or benefits of the offered product. Gillette, Merck, Sony and other corporate brands have maintained their dominance for decades by constantly coming with innovations. Other brands have created their competitive advantages by means independent of product attributes. Coca-Cola, Calvin Klein, Gucci, Marlboro gained their dominant positions by understanding the motivations and desires of the consumers and then created relevant and attractive images around their products. Brands are very valuable assets, recognized by law, which can influence consumer behavior, can be bought and sold and ensure a steady stream of future income to the owner. Building a strong brand is a complex process whose fulfillment requires both financial strain and effort from the marketing department. Strong brands are those that guarantee product quality, those to wich the customer turns to every time and those providing customer satisfaction. A strong brand can bring high income to a company, based only on its image and the expectations of its purchasers. Since the mid 80s during the economic boom, huge amounts have been paid for brands during mergers and acquisitions of companies. These

42


amounts may be justified by the profit growth achieved upon purchasing the brand as well as by the difficulty and expenses needed to create similar brands from scratch. Amid these financial considerations, in the present there is a keen interest coming from senior managers of companies regarding brand strategy. Kevin Lane Keller, professor of marketing at the Tuck School of Business, renowned specialist in strategic brand management, has identified ten key features of the strongest brands in the world: 1.The brand excels at delivering the benefits customers truly desire - the management of companies that own a strong brand focus on maximizing the experiences which the customers have with the provided products or services. 2.The brand stays relevant in time - the company’s management is constantly informed regarding the situation of the market segment of interest, the new trends and the customer preferences. 3.Pricing strategy is based on customers’ perception of value - firms show an ongoing concern in optimizing the price and the quality of a product or service to meet or exceed customer expectations. 4.The brand is properly positioned - companies establish their criterias of competitiveness. They set appropriate and feasible elements of differentiation from the competitors. 5.The brand is consistent - strong brand firms have marketing programs that ensure continuity of the image perceived by the customer. 6.The brand portfolio and hierarchy make sense – the corporate brand creates a unified umbrella for all the brands within its portfolio and there is a well established hierarchy between these brands. 7.The brand makes use of and coordinates a full repertoire of marketing activities to build equity - the management of companies with strong brands make use of all means of communication to ensure that the brand and its significance are consistently represented. 8.The brand's managers understand what the brand means to consumers – companies do research on customer opinion regarding the products or services they offer, periodically making profiles of the targeted customers. 9.The brand is given proper support, and that support is sustained over the long run – the company’s management supports their brand by investing in research and long-term developement of their marketing programs. 10.Companies monitor sources of brand equity Although it has a shape generally materialized by a name, a slogan or symbol, a brand is primarily an intangible value, the sum of all the customers’ feelings towards it. In other words the brand is a promise of quality and satisfaction addressed to the customers. Building a brand means more than just marketing. It means to build a certain reputation with your clients, to manage their perceptions through your actions. This means that the brand can be perceived favorably or unfavorably depending on how you interact with the environment and how actively you manage it. Strong brands in Romania and abroad in 2011 The fight for supremacy of the strongest brands in the world is becoming more and more fierce. Achieving a ranking is not an easy task. In order to qualify for the list of participants at least one-third of the company’s income must be made outside the country

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of origin, the company’s products must be well known over the world and the achieved annual incomes must be comparable to the budgets of small countries. Table 1: Ranking of the top 10 brands in 2011 Brand

Sector

1 2

Previous Rank 1 2

Coca-Cola IBM

3

3

Microsoft

4 5

4 5

Beverages Business Servicess Computer Software Internet Services Diversified

Rank

6 7 8 9 10

Google General Electric 6 McDonalds 7 Intel 17 Apple 9 Disney 10 HP Source: www.interbrand.com

Restaurants Electronics Electronics Media Electronics

Brand Value ($m) 71,861 69,905

Change in Brand Value 2% 8%

59,087

-3%

55,317 42,808

27% 0%

35,593 35,217 33,492 29,018 28,479

6% 10% 58% 1% 6%

Interbrand has been publishing a top of the 100 most powerful brands in the world every year since 2001 , top that is led by Coca-Cola, which is for the 11th consecutive year the most valuable brand worldwide. The well known brand of soft drinks has reached a value of 71,861 billion $, up by 2% since last year. In 2001 at the first edition of the Interbrand ranking Coca-Cola’s estimated value was 68,945 billion $. On second place we have IBM with an 8% value increase since last year up to 69,905 billion $. Microsoft, the brand created by Bill Gates, has lost 3% of its value in 2010 down to 59,087 billion $, ranking 3rd . "This year's Top 100 Best Global Brands has shown that despite a chaotic economic climate, companies have been flexible, have evolved and have innovated in order to meet the customer’s needs. Strategies were refined and social networks have become more important, so the strongest brands of today have made more relevant promises to their customers" it is said in a statement of Interbrand. The 4th position is occupied by Google whose value increased by 27% up to 55,317 billion $, while General Electric is still rank five with a value of 42,808 billion $. McDonalds ranks 6th by taking advantage of the opportunity created by the financial crisis to attract new clients with their premium coffee and healthy menus and managed an increase in value of 6% up to 35,593 billion $. The 7th position is occupied by Intel with a value of 35,217 billion $ and an increase in value of 10%. Intel maintained its growth strategy, spending millions of dollars for the construction of new production facilities, in a year when many companies gave up investing and expanding. By far the biggest surprise of this year's rankings comes from Apple, which reported an incredible 58% increase in value, going from rank 17 last year to rank 8 in 2011

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with a value of 33,492 billion $. This is the first year when Apple is among the top 10 brands. The 9th position is occupied by Disney with a brand value of 29,018 billion $, up by 1% from the previous year while Hewlett-Packard ranks 10 with a value of 28,479 billion $, 6% more than in 2010. Judging by the companies’ areas of activity we notice that technological brands are very well represented in the top and have also recorded the most significant increases in terms of value. Thus among the top 10 most valuable brands in 2011 we have 7 companies in this field (IBM, Microsoft, Google, General Electric, Intel, Apple and Hewlett-Packard). Also four of the biggest value increases since last year have been recorded in the technological sector (Apple, Amazon.com, Google and Samsung). Moreover, one of the few new brands in the top - HTC - comes from this sector. The ranking conducted by Interbrand takes into account the financial situation of the companies , the role of the brand among consumers (how much the purchase decision depends on that name) and the brand’s strength (the brand's ability to provide security regarding the future earnings of the producing company). On the 8th of september 2011 at the BrandRO conference Unlock Market Research has presented a study of the most powerful 50 Romanian brands. Table 2: Top 50 Romanian brands in 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Brand Rank Borsec 18 Poiana 19 Kandia 20 Gerovital 21 Dorna 22 BCR 23 La Dorna 24 Dacia 25 Plafar 26 Timisoreana 27 Murfatlar 28 Napolact 29 Pate Sibiu 30 Cotnari 31 Cristim 32 Farmec 33 Romtelecom 34 Source: ziuadecj.realitatea.net

Brand Izvorul Minunilor Petrom Primola BRD Perla Harghitei Ursus Zuzu Rom Elmiplant Dero Fares Pate Bucegi Bergembier Banca Transilvania Covalact Frutti Fresh Biborteni

Rank 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Brand Eugenia CEC Doina Magura Laura Arctic Ciuc Albalact Rostar Ciucas Bucegi Azuga Domo Altex Noroc Jidvei

"The purpose of this study is to identify and rank the most powerful 50 Romanian brands. Their success stories can be a source of inspiration for creating authentic Romanian models that will give us confidence and make us proud " explain the authors of the study. The research is based on a qualitative study conducted through 20 detailed interviews of people aged between 18 and 46 years and a quantitative study consisting of 1314 telephone interviews. Top 10 strongest Romanian brands are as follows:

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1.Borsec - is perceived as the most powerful Romanian brand, a brand that has retained its quality over time and earned it’s rank trough earnestness. Thus the "queen of Romanian mineral water" is also the "queen of Romanian brands". 2.Poiana - this brand is considered traditional, reliable and friendly by the consumers 3.Kandia - has a history of over 120 years. It owns the Rom chocolate brand in its portfolio, one of the longest running local brands, which has kept its recipe since 1964. 4.Gerovital - is the best-selling cosmetic brand in Farmec’s portfolio. 5.Dorna - continues to incite through innovative approaches; it is the live proof that boldness is a necessary ingredient of a Romanian brand. 6.BCR - a Romanian bank by definition. 7.La Dorna - is recognized both locally and internationally and is the current market leader in the UHT milk segment in Romania 8.Dacia - is the reference brand for Romania, a familiar brand, popular and equally adaptable. 9.Plafar - a natural brand, born and raised from the passion for nature. 10.Timisoreana - a brand that has resurrected the Romanian tradition of beer and a name that the Romanians are proud of. An examination by product category reveals that in top 5 alcoholic beverages Timisoreana was first followed in order by Murfatlar, Cotnari, Ursus and Bergembier. In the food sector the top 5 brands were as follows: Dorna , Napolact, Pate Sibiu, Cris-Tim and Zuzu. Gerovital is rank one when it comes to brands for personal care followed by Plafar, Farmec and Elmiplant. In the services and durable products category BCR was declared the most powerful local brand followed by Dacia, Romtelecom, Petrom and BRD. Borsec is the most powerful brand in the non alcoholic beverages category followed by Dorna, Wonder Spring, Perla Harghitei and Frutti Fresh. When it comes to sweets Poiana is the most powerful brand followed by Kandia, Primola and Eugenia. In the top ten most powerful media brands Pro TV is number one followed by Antena 1, Radio Zu, TVR 1, Prima TV, Kiss FM, Radio 21, Freedom, Truth and Europa FM. The most dramatic increases in ranking since last year have been recorded by Kandia, Gerovital, Primola, Elmipalnt, Perla Harghita, Petrom, Drona, Zuzu and Covalact. Conclusions Managers work with concepts and techniques to improve long-term profitability of brand strategies. More and more companies realize that one of the most valuable assets available is the brand name associated with the goods or services they offer. The ability of a strong brand to simplify consumer decision, reduce risk and to establish expectations is essential the same way it is essential for management to create strong brands that hold to their promise and to enhance the strength of these brands over time. For some this may be an art, for others it is science, perseverance, faith, knowledge, creativity, innovation and genius. Bibliography: [1] Aaker A. David – Building strong brands, The Free Press, New York, 1995 [2] Aaker A. David – Brand Leadership, The Free Press, New York, 2000 [3] Aaker A.David – Brand Portfolio Strategy, Brand Builders Group, Bucuresti, 2006

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[4] Caramida Cristian – Brand and branding. Identitate vizuala , Ed. Brandmark, Bucuresti, 2009 [5] Kotler Philip, Keller K. Lane – Managementul Marketingului 5th Edition, Ed. Teora, Bucuresti 2008 [6] Kapferer J. Noel – Strategic Brand Management, Kogan Page, London, 1992 [7] Keller K. Lane – Strategic Brand Management 3rd Edition, Pearson Education Inc., New Jersey 2008 [8] Purcarea Theodor – Sinteza curs Managementul Brandului [9] Robert Kevin – Din dragoste pentru brand, revista Bizz nr. 91, septembrie 2004 [10] Ries A. L., Trout Jack – Pozitionarea: lupta pentru un loc in mintea ta, Ed. Curier Marketing, Bucuresti, 2004 [11] ziuadecj.realitatea.net [12] www.interbrand.ro

47


FOREIGN TRADE IN THE CONTEXT OF GLOBALIZATION Assistant Lecturer Ivona Stoica, Ph.D Candidate, Romanian American University 1B, Ezpoziției Avenue, Sector 1, Bucharest Ivona.stoica@rau.ro

Associate Professor Nicoleta Rossela Dumitru, Ph.D Romanian American University 1B, Ezpoziției Avenue, Sector 1, Bucharest nicoletad01@yahoo.com Abstract: The meaning of globalization can be characterized in terms of three essential features: universal character, economic and social implications things generated also by the intensity of the event. According to experts, globalization is analyzed as the competitive advantage that can be earned by a company by expanding its global business, given that the activity meets the criteria of efficiency. Beyond the action of factors such as free movement of labor and goods as the main criteria that multinational companies are considering them in the expansion of global business, globalization is seen as a continuous process, characterized by the development of foreign investment, enhancing export activities and the development of international strategic alliances in order to extend business activities into new markets. Keywords: globalization, marketing, international market.

competitive

advantage,

communication,

global

JEL Classification: M 31 1.

Reasons for entering international markets

The world is becoming smaller as speed increases communication, transport and circulation of financial flows. Products manufactured in a country enjoys of an enthusiastic acceptance in other countries, so in the 70s, the number of multinational corporations from the richest 14 countries of the world has done more than triple, rising from 7000-24000 . Basically, these companies now control a third of all private assets and sales of 6 billion dollars Worldwide. International Trade now provides a third of U.S. gross domestic product, up 11% from '7010. In this context, the whole human development today and in coming decades is reaching a new level of quality simultaneously by two fundamental processes: ⇒ Developing new technologies, primarily the information technologies; ⇒ Globalization of the competition in particular on the financial markets.

10

Ph. Kotler, Managementul marketingului, Ediţia a IV-a, Editura Teora, Bucureşti, 2005, pg. 496

48


The phenomenon of globalization in all areas of the world economy emphasizes the intensity of international business leads to an intensification of competition. At this stage of development, is born global competition in all markets present geographical areas of the Earth. Formation of global markets and their gradual integration into a single market, global, starts a process of formation of global monopolies. The reason for this is simple: a single market cannot be divided - can be conquered, and therefore competitive mechanism is more commonly identified with the military art. The concrete action plan of the company on conquering new markets, to maintain and to overcome the development of offensive strategies (such as: frontal attack, guerrilla attack, etc.) or defensive strategies (such as: fixed defense, counterattacked etc.) represents action alternatives in the nature, intensity and reactions of competitors. The globalization process of competition covers two situations, namely: ⇒ An aggressive company deciding to use cash flow achieved of its market for its product to launch a new foreign market where competition is local; ⇒ The competitor to defend itself, counterattack not its market, but foreign markets where the "aggressor" is vulnerable. In general, companies can respond to global competition in different ways. The most important priority of a new approach to global competition is that organization/company to remain competitive to global level through the globalization of planning, coordinating and implementing global marketing strategies. A global company sees the world as one market, "operating", obtained by research and development, production, marketing and financial operations, cost benefits and worldwide reputation. These advantages are at the origin state and the global restructuring of global companies.11 Ph. Kotler, in his "Marketing Management", even identifies a number of factors that push more companies to the international arena, the most important being: ⇒ Global firms offering better products or lower prices may attack domestic market the company concerned. The company could try to counteract these competitors on their home markets. ⇒ Company discovered that some foreign markets have better opportunities than the domestic market profit. ⇒ Company needs a larger customer base to achieve economies of scale. ⇒ Company wants to reduce dependence on one market. ⇒ Companies customers exit abroad to the international markets and need an international service. But before taking the decision to exit the international market, the company must carefully weigh several risk factors: ⇒ The company might not know foreign customer preferences and fail to provide an attractive and competitive product. Thus, the introduction of Hallmark greeting cards has been a failure in France French dislike syrupy sentimentality and prefer to write their own greeting text. Philips began to get profit in Japan only after he dropped the coffee filters to fit in the little Japanese cuisine, as well as electric shavers, to fit in the “little’ palm of a Japanese. CocaCola was forced to withdraw 2 liter bottle from the Spanish market, after discovering that few Spanish have refrigerators with compartments large enough for such a bottle. Initially, the wax floor from Johnson was a failure on the Japanese market – because the floors were

11

Victor Danciu, Marketing Internaţional, Ed. Economică, București, 2001, pag. 41

49


too slippery, and the company overlooked the fact that the Japanese never wear shoes at home. ⇒ The company might not understand the business culture of that country or not know how to deal effectively with the locals. Crest toothpaste from P&G initially failed in Mexico because American advertising campaign was used. Mexicans do not care too much advantage of preventing tooth decay, and scientific and didactic tone of advertising has not caught at all. ⇒ The company might underestimate the effect of foreign statutory and record unexpected costs (the necessity for managers with international experience);12 ⇒ Instability of governments - involves a high risk of expropriation, nationalization and restrictions on repatriation of profits; ⇒ Monetary depreciation - external debt and political and economic instability forces the devaluation of domestic currency against others coins, foreign companies wanting their currency repatriation of profits in strong currency; ⇒ Restrictions on market penetration - the high percentage of local staff, transfer of technology limitations, restrictions on repatriation of profits. ⇒ Tariff barriers - high tariffs on imports; ⇒ Conflicts of culture, technology piracy (making local products), the high cost of adapting products, etc.13 Because of this discordant combination of advantages and risks, when a company decides to expand to an international market, must clearly define its marketing objectives and policies, setting (approximately) what proportion of total sales come from abroad. The firm also must decide if markets fall only a few countries or more and how fast it is time to expand. Thus, founded in 1959 by co-founders Jay Van Andel and Rich DeVos, Amway is one of the largest and most important direct selling companies in the world. The company expanded into Australia in 1971, and in the 80s in 10 countries, until 1999 to turn into an international giant with a sales force numbering over 3 million independent distributors who bring revenue of 5 billion USD. Today, Amway sells its products in over 80 countries and territories around the world and the target is that the marketing abroad to represent 80% of the total sales. It has over 13,000 employees, more than 160 distribution centers and offices in 57 countries, over 500 researchers involved in developing new products, more than 600 patents registered and pending trademarks additional 400. Keywords in this century are "Think local, act global”14. Amway is guided by this principle for over 45 years.15 2.

Forms of international market penetration

Market penetration ways varies from the low-risk and low-involvement entry to indirect methods involving maximum effort. Low Profit Low Risk

Maximum Profit

12

Ph. Kotler, Managementul marketingului, Ediţia a IV-a, Editura Teora, Bucureşti, 2005, pg. 498 13 C-tin. Sasu, Marketing internaţional, Editura Polirom, Iaşi, 2001, pg. 19 14 www.amway.ro 15 Idem

50


Maximum Risk Indirect License Direct Direct Export Joint-ventures Export Export Property Source: E. Hill, T. O'Sullivan, Marketing, Header House, Oradea, 1996, pp. 307. As with all strategic decisions, with higher risk, the higher the profit, but the choice depends on the availability and the firm's ability to provide managerial resources, financial and operational. Normally, ambitions and firm size will influence how the target market is moving towards. Type of product/service, firm market, level and nature of competition, etc., will contribute to choose the best input method, however, it was found that most companies experience in the international market starts with exports. a) Exports - is the most simple, flexible and low level employment in international marketing and requires expansion of market. It can be: ⇒ Indirectly - the company's activity limited to selling goods to a middleman or exporter who oblige itself to sell abroad; the advantages of indirect exports are lower investment costs, limited, early market positioning, lower risk, flexibility. For example, Pepsi Cola, to enter the Indian market where local producers of soft drinks and officials disfavor multinational company came up with an offer that could hardly be refused. Thus the American company has offered to help India to export agricultural products to a value exceeding the cost of purchasing the necessary essence of Pepsi-Cola drink production. She also promised to focus some marketing effort on rural areas to contribute to their economic development. Subsequently the company has offered to build a research center for agriculture and to give the Indian state the processing technology for agricultural products, their packaging and water treatment. After three years of negotiations the Indian bureaucracy gave to that tempting offer from Pepsi. It is obvious that the American company's strategy was based on providing a set of benefits to attract the support of various interest groups that could influence the market acceptance. This strategy Pepsi Company aimed directly the entrance on the second world market to a leadership level. ⇒ Directly - requires the company to assume responsibility for selling its products abroad. Forms that a business can make direct export are: department/division of export sales branch abroad, overseas sales force, distributors or foreign agents. Advantages and disadvantages of direct export are reflected as follows:

ADVANTAGES DISADVANTAGES 1. A good control of export operations 1. Low external control market 2. Limited financial risk 2. High commercial risk 3. Direct contact between sellers 3. Low market penetration 4. Lower costs 4. "Low" Image of the company Source: C-tin., Sasu, International Marketing, Ed Polirom, Iasi, 2001, pp. 22 b) License - is authorized by a foreign firm to manufacture the product by a local firm, the latter giving him the right to use the technological processes, patents or trademarks in exchange for economic compensation. Licensing means reduced marketing

51


efforts, as licensee of the country researching the market and the product does not exceed the boundaries of this country. E-Trade Group, an online broker of securities in California, concluded so far on-line business units in Australia, Canada, Denmark, Germany, Hong Kong, Japan, Correa, Norway, South Africa, Sweden, the United Kingdom. Coca-Cola provides components without product patent cannot be achieved. Particular variants of the License Agreement: The Company Marriot signs a management contract with owners of some foreign hotels, under which manages the hotel came under the mark, for a fee. A special form of licensing is the franchising, meaning the understanding by which a mother-company grants individuals the right and license to sell products or services, and the ability to use business system developed by the company (McDonald's, KFC), etc.. c) Joint-ventures - requires greater involvement in international marketing. In this case, a domestic company and a foreign company reach an agreement for carrying out economic activities under specified conditions. Coca-Cola and NestlĂŠ have joined forces to develop the international market for tea and coffee "ready to drink", which is currently sold in considerable quantities in Japan.16 d) Direct property - is used only when demand justifies the investment made in that market and production may be the only method of access. The presence on this kind of stage allows the firm to immediately feel the external environmental changes, allowing for rapid adaptation. Hewlett Packard (the American producer of computers) deliberately adopted abroad that would gather the production of marketing, adjusting their production in different countries, which allowed him to seize the opportunities offered by markets. 3.

Evaluation of potential markets

It is hard to say what would be optimal in the case of a foreign market penetration and, of course, what would be the most appropriated markets for a company. Many companies prefer to enter neighboring countries, because they know better and are easier to control costs. An example is that most of the U.S.A. market is Canada (second place was Mexico) or that Swedish companies have started to export first to their Scandinavians neighbors. It cannot be neglected in choosing a psychological proximity markets in this so many U.S.A. companies prefer to sell in Canada, England, Australia, than in larger markets like Germany, France etc.. because they feel more at ease on their language, culture and legislation in these countries. Generally, a company will prefer to enter in countries with highly attractive market with low risk and withinthat market the company has a competitive advantage. When evaluating a new market, should be followed if the company can earn enough investment to cover the risk factors and other negative elements. An example of a way to exploit opportunities neglected global market consists of the poorest markets of the

16

Ctin. Sasu, Marketing internaĹŁional, Editura Polirom, IaĹ&#x;i, 2001, pg. 26

52


world. Some companies have been in pioneering by "attacking" poor markets, holding 85% of world population. ⇒ Colgate-Palmolive "wander" with vans trough Indian villages within are installed video devices, showing them the benefits of brushing villagers; ⇒ Fiat developed Palio model, as " car of the third world", which is a huge success and it’s about to be launched in other developing countries. The challenge is to imagine effective ways to use marketing to fulfill dreams of better life in the greater part of the world. Identification of criteria against which selection is made for international markets is an extremely important process by which the company analyzed different by dividing it in attractive countries and countries in which business will be avoided. It is considered that the selection of foreign markets operates four critical factors: ! Foreign market size and growth is analyzed by: - Macroindicators (which usually means the components of the macro-environment) geographic (area of the country, climate, topographic features), demographic (population, age structure, density) or economic (the size of gross national product per capita, income distribution) etc..; - Microindicators such as: provision of radio and television stations broadcasting number, cinema halls, the number of hospitals and hospital beds, alcohol, coffee consumption, the fuel availability telephones, the number of tourists etc.. ! Political conditions are highlighted by the action of such factors as the likelihood of nationalization, bureaucracy, and expropriation, terrorist attacks, the number of political extremists, restrictions on free movement of capital, state intervention in the economy, , limits imposed for the foreign companies etc.. These political risks are highlighted by indicators such as advisory groups generated by Frost & Sulivan, Business International, which reflects long-term trends, but events like the World Trade Center terrorist attacks, Iraq war, winning elections in Austria by an extremist party etc. was impossible to predict. ! Competition expressed in number of domestic and foreign competitors, economic power available to them and works at a foreign market for the position expressed in the segments of consumers, limit or increase the country's chances of being selected for penetration by an international business. ! Similarities between different foreign markets are made by using the same communication forms (official language), use of common reference systems (measurement, legislative etc.) and allow the approach of a company, as a priority, those external spaces have structure as common points of production and transport, consumers, trade, education, and health. From this point of view foreign markets can be classified into: ⇒ Interconnected markets, common customers or competitors who shared that trade between them with a large volume of goods and services, trough the joint distribution or action taken in a market which affect the operations performed on the other market. ⇒ Similar markets - customers have the same tastes, interests and purchasing behavior and media markets that are similar regarding the products, advertising regulation or the infrastructure distribution. Ex. Reasons for entry of foreign investors on the Romanian market

53


NO. 1. 2. 3. 4. 5. 6. 7. 8.

REASON SELECTION

FREQUENCIES

PERCENTAGES

Expanding into new markets activities Forcasting a higher profit Assurance and control sales in Romania Low cost labor Recovery of local skills Access to some local resources of raw materials Creating new jobs Production for the mothercompany (by importing it again)

76

63,3

15 8

12,5 6,7

8 7 2

6,7 5,8 1,7

2 2

1,7 1,7

TOTAL

120 100 NOTE: Foreign investors from 26 countries surveyed (U.S. - 17, Germany - 14, UK - 12, France - 12 Italy - 11, Austria -11, etc.). 4.

The process of internationalization – choosing international markets

Most countries deplore the fact that too few of their companies participate in international trade. Thus, the country does not earn enough foreign currency to be able to pay the necessary imports. In addition, there is also fear that domestic companies will and be eventually affected by the competition of large multinational corporations and sometimes even completely taken over. Countries that fear that, tries to encourage national companies to grow and expand globally. Many governments sponsoring aggressive export promotion programs in order to determine firms to export, but such programs require a very good knowledge of how to make internationalization of companies. In the process of internationalization, firms go through four stages as follows: ⇒ The absence (total) export activity; ⇒ Export activity through independent representatives (agents); ⇒ Establishment of sales subsidiaries abroad; ⇒ Establishment of production facilities abroad. The first thing to do is to determine the companies to pass the first stage in the second. This is made easier by studying how companies take the decision to export. Most companies will choose to work with an independent agent and to enter a neighboring country or like them. Then, the firm will hire more agents to enter. Later, he will set up an export department for relations with agencies. After that, the company will replace the agency with its own sales subsidiaries in countries with higher export market. This increases the investment firm and the degree of their risk and profit potential. For the management of the subsidiaries, the company replaced its export department with an international department. If some markets are still high and stable, or if the host insists on local production, the company will take the next step: the placement of production capacities in the respective markets, which is a greater degree of commitment, but also potential higher profit. At this point, the company acts as a global

54


company and has engaged in optimizing its global activities of contracting resources, financing, production and marketing.17 Bibliography: [1]. Dumitru N. R., Comunicare și promovare în afacerile internaționale, Editura Universitară, București, 2009 [2]. Danciu V., Marketing Internaţional, Editura Economică, București, 2001 [3]. Hill E., O’Sullivan T., Marketing, Editura Antet, Oradea, 1996 [4]. Kotler Ph., Managementul marketingului, Ediţia a IV-a, Editura Teora, Bucureşti, 2005 [5]. Sasu Ctin., Marketing internaţional, Editura Polirom, Iaşi, 2001

17

Ph. Kotler, Managementul marketingului, Ediţia a IV-a, Editura Teora, Bucureşti, 2005, pg. 511

55


CONSIDERATIONS REGARDING THE METHODOLOGY OF ANALYSIS AND PERFORMANCE EVALUATION FOR ROMANIAN SMALL AND MEDIUM ENTERPRISES BASED ON KNOWLEDGE Junior Assistant Mariana ENUȘI, PhD Candidate, Romanian-American University 1B, Expoziţiei Avenue, Sector 1, Bucharest enusi.mariana@profesor.rau.ro Abstract: The key-factor in profitability of the small and medium enterprises based on knowledge is the intellectual capital and non-corporal actives of those. The empirical formers studies confirm that the intellectual capital has a great impact to the performances of the small and medium enterprises based on knowledge. The aim of this article is to exam the inter-relations and inter-actions between the components of the intellectual capital and the non-corporal actives in the process of evaluation the performances of the enterprises based on knowledge that is a competitive sustainable advantage. These are basic for help the decisions of the management o allocate resources and the decision of the investors regarding the correlation between value and price. Keywords: Competence Management, Competence Management Information Systems, Methodology of analysis, small and medium enterprises JEL Classification: M10 1. Introduction The globalization and acceleration the technological changes stress inside the economical medium the importance of the ongoing the activities making the differences between the modern and classical enterprises in allocation the resources and the decision of the investors about the correlation between the value of the enterprises based on knowledge and the price of the non-corporal actives (intangible actives).In this context, there are new opportunities (or threatens) for business. They can observe the real growth of the incorporate knowledge in human capital and also in the intellectual capital of the enterprise based on knowledge and opening the new contradictions between the liberty of the immaterial labor and its disciplinarian, between the creativity of the intellectual labor and control. 2. Intellectual capital In 1990’s there was developed the concept of the intellectual capital, when the managers realized that the two problems regarding the company management and the evaluation are only the two sides of one coin.”-what you want to lead you must measure” and” what you want to measure you can lead”. The intellectual capital represents the fusion

56


between the two flows of thinking. (Roos et al., 1997). In Romania, since 2000,they have stressed these two flows and the two problems regarding the management and both the evaluation determined some companies to evaluation the intellectual capital and non-corporal actives. According to the Minister of Public Finance of Romania, no. 306 of 2002 for approval of simplified accounting regulations harmonized with European Directives, intangible assets include: -formation expenses; -development costs; -concessions, patents, licenses, trademarks, rights and other similar values; -goodwill; -other intangible assets, and -intangible assets in progress. The structure of the intellectual capital is deeply rooted , was the first time that the economist John Keneth Galbraith in 1969, and Peter Drucker talked about "knowledgeable workers�. The intellectual capital is an intellectual material - knowledge, information, intellectual property, experience – these may be put to increase the welfare (Stewart, 1997) of enterprises based on knowledge. Intellectual capital and major components

In the context of modern business is important to understand the entire company as a business value as the sum of all assets (tangible and intangible). A classification of the assets of modern business, as follows: - Differentiable Assets- this class of assets is often unique and includes assets such as production, processing and distribution, which are similar between companies, but still different in some respects from those of competitors The following figure present market value of a company from liquidation value of the generic assets and market value of assets plus market value a generic intangible assets.

57


Single active

Human capital

Differential active (complementary)

Active intangible (Intangible)

Production Facilities Distribution and sales capabilities Market value Goodwill (goodwill)

Figure no. 1 Market value of a SME’s with intangible assets Source: I., Anghel – Theoretical and Applied Economics,Editura ASE 2004 In the context of current economy, the management role is to establish enterprise based on knowledge value than generic asset value. The performance depends on today's modern enterprise knowledge and ability of human capital (potential value) in intangible assets of the organization (such as trademark, patents, licenses, goodwill, trade secrets, copyrights, intellectual property, etc.). Active intangible (Intangible)

Organizational expenses

Intellectual property

Goowill

Intellectua l capital

Human capital

Source: Author’s owner 3. Evaluation of intangible assets (intangible) under financially Reporting Standards (IFRS) Through the performance evaluation methodology of the enterprise based on knowledge they answer questions such as: -What is the real value market of the enterprise -Is this value satisfactory or not? -How did they get the results? -Which are the wanted performances and also the results and what is the level of the performance? -What have they do for get the wished performance? -What is the intangible value indicated (not shown in the balance sheet)? The general aim of the evaluation methodology consists in a continuous training and the most important think is to help the evaluators of he non corporal actives regarding in the ownership and use recognized assessment methods appropriate for determining

58


market value or fair value of intangible assets separately, both required for carrying out transactions based on market value and requirements for financial reporting under International Financial Reporting Standards - (IFRSs). The five recrecognized methods of evaluation of separated intangible assets entered into the three traditional evaluation approaches are: II.1. Transactional method II.2. Relief from Royalty Method II.3. Premium Profit, or Incremental Income Method II.4. Multi-period Excess Earnings Method II.5. Replacement Cost Method The forecast period of financial indicators used in applying the five methods above, is shorter than the remaining economic life or equal with legal life. The economic life is defined as the period in which intangible assets are expected to generate an economic benefit for their owners. Legal life is the period in which intangible assets are protected by law. The six stages of implementation of these methods are: a) estimate the remaining economic life of the intangible asset ; b) forecast net turnover achieved by using the intangible asset; c) determining the appropriate royalty rate (the market); d) determining the discount rate specific intangible asset under evaluation; e) calculating the present value of net charge economy; f) calculating the depreciation tax benefit - but where is assessing the initial recognition of an intangible asset in the financial statements. Classical sources of profit or cash flow are either extra an excess of selling price (premium price) reduction of expenditure items (variable or fixed-economies of scale) or a combination of the two sources above. Comparing the flow of income or cash flow forecast can be made: - be between the entity using intangible assets and other similar entities without an intangible asset. If a brand is product evaluation. Applying this procedure is subject to credibility than they can forecast revenue or cash flow that is not feasible to use similar entity. If there is sufficient information to make such a credible forecast, additional profit method should not be used, either between that of the entity, in two ways: with and without the use of that intangible asset. It is the evaluation of a patent and a non-compete agreement. Always preferred result of the assessment, based on direct knowledge of the market, is where intangible assets are trade on a market, or are the current trading prices of similar intangible assets, either current trading prices of some similar intangible assets, in the second case of being necessary, some corrections to reflect differences between selected elements of comparison (respectively the differences between intangible assets and intangible assets valued comparable selected as appropriate). The initial evaluation of identifiable intangible assets with finite economic life, so liquidated, following a business combination, fair value of these will include the tax benefit resulting from the amortization of intangible assets. Form for calculating the tax benefit (BF) is: BF = Estimated value ×

n

{(n − F )× S}− 1 cap

where:

59


Estimated value = total economy or discounted fee, or replacement cost of internal generation identified with the cost of an intangible asset similar or identical; n = number of years for amortization of intangible assets; Fcap = capitalization factor and required update rate; S = tax rate. 4. Assessment of intellectual capital and intangible assets in a modern business. Case study at S.C. Arobs Transilvania Software S.C. AROBS Transylvania Software has recently turned 11 years: S.C. AROBS Transylvania Software partner becomes Microsoft Gold Certified Partner On July 1, 2009, S.C. AROBS Transylvania Software (AROBS) has acquired the status of Microsoft Gold Certified Partner - the highest form of partnership between Microsoft and companies operating in IT & C Achieving. Segment-sized GPS and PDA S.C. Transylvania AROBS 2010 estimate for growth this year lower than that recorded last year in 2009 to a figure approaching 5 million and estimated a forecast for market share between 20 and 25%. An estimated 2 million revenues from outsourcing services company, approximately 20-30% of the total business of SC AROBS Transylvania. The enterprise based on knowledge management, internally generated computer programs are also an advantage for the organization and ensure long term sustainability of the company are internally generated for the skills and knowledge that group of authors who contributed to making them part of the company's intangible assets. Internally generated computer programs to describe their functionality to address the cost of historical costs for generating computer programs, if these expenses are not shown separately requested: a. number of man-hours required for recreation program; b. the categories of personnel needed; c. employee wages in section b., and d. share information to determine administrative costs or overheads; e. the registration fees. But especially for the income approach: 1. income / savings to the historical software; 2. forecast revenue from licenses including valves for the remaining life of the software; 3. direct expenditures related to income forecast point b.; 4. forecast expenditure (eg. maintenance costs). Remaining economic life to meet the following requirements: i. which was originally expected economic life and that is the date of valuation; ii. when it was put into service program; iii. description of internal development that could prolong the economic life; iv. description of internal development to replace the computer program that could reduce its economic life, and v. description of external factors that may affect the economic life remaining. -Euro-

60


*including direct wage costs and overheads

5. Evaluation of a method patent economy / fee exemption For the value of a patent application involves: - List of patents for which protection pay legal fees; - List of patent applications; - The case of patents, the economic effects achieved; - R & D spending to generate historical patents.

61


- Identification of patents and products share the administrative costs or overheads; - Identification of patents and related products are expected to have commercial life; a) estimates of income from patent over the remaining economic life; b) estimates of direct costs related revenue in a. - Feedback about the possibility of extension of patent protection legally provided over the life; - Details of possible transmission of economic rights through patent license agreements or assignment. Under assessment is a patent for a new product, the company used SC AROBS Transylvania Software, owner of the patent, which is acquired by the company Mio. To assess the balance sheet is a patent by the method of acquisition, that company's acquisition by the company Mio SC AROBS Transylvania Software. Type the requested amount is fair value. Date of assessment: January 10, 2009 Assumptions for assessment are: Øuseful life of the patent was estimated to be 5 years Øsales for products manufactured using patent was as expected: Year 2009 2010 2011 2012 2013

- thousand.EuroAmount 4.400 4.840 5.227 5.541 5.818

§fee turnover rate, the field was set at 4%; §company profit tax rate is 16%; §economic discount rate (exemption) of net charge was set at 16%. Calculation of Tax Benefit due to the deductibility of depreciation, is: -thousand Euro-

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For assessment was to highlight the difference between book value figures of the company acquired its real market value through intellectual capital and intangible assets owned by default Tax benefit of depreciation is worth € 651,000 and the fair value of the patent was calculated to € 6,215,000. The difference between the two values is the subject of our study, by default of intangible intellectual capital of SC Transylvania AROBS maintains financial goal for this year 2010 and aimed at business between 7 and 8 million €, an increase over the previous year in 2009 with 30% for 2011 and plans to achieve a figure of up to 10 million € . 6. Conclusions In practice evaluation of intangible intellectual capital of the firm's default to normal traditional highlight of the five methods with rigorous approaches. Evaluation methods of intangible intellectual capital default of enterprises based on knowledge in Romania meet international standards. The investigation conducted by the author with reference to intellectual capital market has allowed the establishment of fundamental issues related to the formation of intangible intellectual capital implication of enterprises based on knowledge. Among these are: a) the state has relegated many market institutions; b) the scarcity of specialists for the "production and marketing knowledge; c) reduced integrity of the national economy in the world economy; d) lack of incentives to professionals able to create and invent states tend to conceal innovations and know-how; e) the inventors migration abroad; f)lack of financing sources of business innovators, etc. .. According to research conducted at the micro level analysis has shown that driving out local businesses need and opportunity rather than actual market cost of the product via appropriate intellectual and rational management of intangible assets, and in particular, intellectual property default. But once the assessment bears a theoretical and practical, roll the balance sheet as at most companies, these intangible assets are not indicated. Research results showed that in practice, local businesses face a number of problems associated with managing intellectual capital, intangible assets, including the highlight: a) lack of sources of funding for both development and for recording intangible assets; b) lack of knowledge needed in the recording of intangible assets; c) moral rapid aging of intangible assets; d) lack of incentives from the state enterprises for the creation of intangible assets; e) non-recovery of costs for creating and recording of intangible assets related to small volume production; f) unenhancing the legal framework protecting intellectual property. Suggestions: 1. Today, innovation is needed and setting up infrastructure. Achieving that goal is only possible as a result of carrying out state policy innovation active mass use of various levers and instruments. Basic tasks that faced Romania in the formation of innovative system is derived first, the formation of normative-legal basis favorable to innovative activity, above all in matters of

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protection, disposition and use rights to the intellectual capital ( starting point should be to enact law on intellectual property), and secondly, building an infrastructure developed to support the intellectual activity and rapid transmission of the results of scientific research that has commercial potential, business sector for production and removal market innovations in the form of goods and services. 2. A major innovation in creating infrastructure has training infrastructure. In Romania it is necessary to form an effective system of financing of innovative activity, both at the expense of budget resources and extra budgetary funds account. State funding for innovative scope should be oriented in the following areas: capital injection (partially without being paid) for innovative projects that have a high commercial potential able to become the "locomotive" to increase innovation, innovations in financing off-budget funds, full state funding irreversible and innovative projects, which bears the national character, but of interest to private business. 3. It requires the protection of local entrepreneurs by providing innovative risks and other risks related to intellectual property objects. To address this problem, the state must ensure market transparency and stability of national security, contribute to implementation of international standards in insurance business and supervisory standards, to continuously improve insurance legislation, to create conditions for integration Romania's insurance market in insurance and reinsurance schemes. Bibliography:

[1]. Anghel, I., – Theoretical and Applied Economics,Editura ASE, 2004; [2]. Brennan, N., Connell, B., - Intellectual Capital: current issues and policy implications, journal of Intellectual Capital, 1(3), 2000;

[3]. Bontis, N., - Intellectual Capital: an exploratory study that develops measures and models, Management decisions, no.36, 1998;

[4]. Drucker, P., Post capitalist society, New York: Harper Business, 2003; [5]. Lev, B., New accounting for new economy, available at www.stern.nyu.edu/bev, 2000;

[6]. 6. Lev, B.,

Response to your questions concerning my testimony before your committee, New York University, Leonard Stern School of Business, 2002;

[7]. Petty, R., Guthrie, J., Intellectual Capital literature review: Measurement reporting and management, Journal of Intellectual Capital, Vol. 1 (2), 2000;

[8]. Stan, S., - Seminar de Pregătire Continuă - SPIC 08 Evaluarea Activelor Necorporale, IROVAL – Cercetări în Evaluare, Colecția Biblioteca ANEVAR, 2008;

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Holistic Marketing Management Volume 1, Issue 4, 2011  

The School of Management-Marketing of the Romanian-American University prides itself that as ambitious newcomers in the educational field, w...

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