Tuesday, July 31, 2012

Word-of-mouth marketing or viral marketing?

Word-of-mouth marketing or viral marketing? What's the difference?
Recently I shared with you a few tips on how to generate word-of-mouth marketing for your business. I received a few emails as well as comment post on the difference between word-of-mouth marketing and viral marketing, so I figured what better time to explore the differences in these two types of marketing.
Word-of-mouth marketing is when a business does something and their consumer tells five to ten friends. Word-of-mouth marketing has an echo affect. The initial sound is loud and then it fades into the background.
Viral marketing unlike word-of-mouth marketing has a compounding affect. A consumer tells five to ten people and then those five to ten people tell another five to ten people. The driving force behind most viral campaigns is the passion a consumer carries. It's like a virus that continuously infects more people and spreads without requiring anymore marketing effort.
While the two are similar as you can see they are not the same.
Word-of-mouth marketing is a key component to the growth of a small business. It's often word-of-mouth marketing that keeps small businesses running in the early days of operation when there is little to no marketing budget. The consumer shares their experience with your products or services and they share it with their family and friends. This increases your consumer base and increases your sales.
Viral marketing is more about reaching out and touching the passion point of your consumer, so that the passion drives the message and the message continues to reach the masses without assistance from you. You can orchestrate a viral campaign, but very seldom are viral campaigns that are orchestrated as successful as those that are just driven by the passion of a consumer. In order for it to reach a level of success your consumer must feel they have a personal stake and investment in the success of your campaign.
It's important to also realize that the success of a viral campaign depends on the vehicles use to transmit the message. There are companies that are more virally equipped than others. In order to create a strong viral link the message must be able to transport from television advertising, to radio and other extended means of broadcasting to the power of the Internet.
In conclusion the major different between word-of-mouth marketing and viral is that word-of-mouth is often driven by you the marketer or business owner and viral marketing driven by the passion of your consumers and it's success does not depend on you.

10 Simple ways to generate word of mouth Advertising

Advertising today includes paid and free marketing placement. Buzz and word-of-mouth marketing fits into this category, though you can also spend money to create buzz or great word of mouth. In my series of articles, I'll explain what you need to know about these tactics and show you examples of how they work in the real world so you can put them to work for your own business. Just ensure that when you plan and implement your marketing strategy, you avoid these common marketing mistakes. Getting the Terminology Straight
Just in case you're still thinking that word-of-mouth marketing isn't a legitimate, controllable, manageable approach to promoting your product or service, think again. An entire professional association is devoted to word-of-mouth marketing, called the Word of Mouth Marketing Association, or WOMMA - a hilariously memorable acronym.
More important, though, is the fact that WOMMA consists of corporate members only (not individuals), which means that big companies are just as interested in word-of-mouth marketing as small businesses and solo entrepreneurs. For example, just look at a few of the companies that are members of WOMMA - the A&E TV network, Coca-Cola, Dell computers, General Motors, Yahoo!, and Zondervan religious publishing.
In the marketing world, Acronym's and Jargon are thrown around all over the place, yet there are some subtle yet important differences between recent marketing terms, which I share with you here:
Word of mouth: The act of consumers providing information to other consumers.
Word-of-mouth marketing: Giving people a reason to talk about your products and services and making it easier for that conversation to take place.
Buzz marketing: Using high-profile entertainment or news to get people to talk about your brand.
Viral marketing: Creating entertaining or informative messages that are designed to be passed along in an exponential fashion, often electronically or by e-mail.Seeing the Power of Word of Mouth
Many advertising, publicity, and marketing experts believe that word-of-mouth marketing is the most powerful type of exposure that you can get for your product, service, business, or store. After all, who are you most likely to believe? A paid advertisement, featuring an actor who earns his fee by reciting a script written by a salaried copywriter working for a hired ad agency? Or the unsolicited suggestion by one of your friends that "you should see this movie; you'll love it!" or "buy that car; it's really reliable," or "try this restaurant, or gift shop, or dry cleaner, or face cream, or sneaker, or computer, or cell phone"?
Obviously, you're more likely to listen to your friend. After all, she hasn't been paid to recommend that product or business. She gains nothing if you do or don't try it. She's simply telling you what she loves or appreciates - and that's a powerful endorsement for any business. Now all you have to do is get those powerful endorsements!

Mouth Publicity in Marketing

All of you would know that word of mouth is a very powerful public relations weapon. But not everyone realises that one of the best ways of generating it is through publicity. Publicity is getting free editorial coverage in newspapers or magazines or being talked about on radio or television.
It is very effective when it happens – they say publicity is seven times more effective than advertising.

What is Public Relations?

Public relations includes a variety of tactics that strengthen your credibility, enhance your image or influence public opinion. These tactics, such as speeches, special events, promotional activities, product launches and product give-aways; sponsorship, newsletters, annual reports, articles and media releases are targeted to an audience. PR involves communicating who you are, what you do, why you do it, and how you make a difference.
The terms public relations and publicity are often misused. Publicity is only one function of public relations. It is media coverage – news stories, feature articles, radio talk show interviews, television appearances, editorials and reviews.
Publicity can be gained through effective media relations such as media releases or news conferences; press kits, press tours and personal letters or phone calls to editors and journalists.

PR for You

Most large businesses even those with substantial marketing and advertising budgets devote considerable resources to public relations because they realise it is one of the best and most cost-effective ways for them to attract customers and increase their business. Small businesses should look at the benefits of PR and positive media coverage because it can:

  • Attract customers
  • Increase demand for your products or services
  • Gain an edge over your competitors
  • Enhance your credibility and prestige
  • Get your message across without the expense of advertising
  • Create goodwill in your community

Free Publicity
Reading an article about a product or seeing a story on the news has a lot more credibility but there are no guarantees that your story will get a run.
One of the unique characteristics of publicity is that you have little control over whether your media release or news conference will be covered. Editors have complete control over a publicity item. They are the ones who decide if it will be used and they also have the editorial license to alter or use only part of it.
This is where an expert can help – one who understands how to make your media release stand out and be noticed and also someone who has good media contacts and strong working relationships with various journalists and editors. Free publicity is really misleading as it does cost money to employ an expert to promote your product or to pay a staff member or yourself (time is money) to handle what is involved.

The Five W's
Here's a few tips on how you can write your own media release and attract interest in your product or service:

  • First and most important thing – have something interesting to say – consider the Unique Selling Point
  • Write a catchy headline – short, punchy phrase
  • Bright opening – strongest point first
  • Content – the 5 W's – What, When, Where, Who and Why
  • Use memorable quotes
  • Title it Media Release and always include the date
  • Include contact details of telephone, mobile, email and website address
  • Use letterhead and keep content to one page
  • If emailing use strong subject heading and copy and paste release in body of email
  • Send your release to the appropriate person – do your research
  • Follow up – media liaison
  • Suggest a photo or photo opportunity that will add to the impact of having your information publicised

Coordinated Approach
To ensure the success of your public relations campaign, PR objectives should be clearly defined and developed as part of the overall marketing strategy. The best results will be obtained through a coordinated approach to all your marketing, advertising and public relations activity. Your key messages, information and branding should be included on all your marketing and PR collateral.
Publicity is a very valuable tool but is often overlooked as a true means of creating interest in a product or service. Normally public relations is an afterthought to an overall marketing campaign and can represent only a small percentage of the overall budget but it can work very well and produce tremendous results.
Not all publicity will help to increase sales but it can generate public goodwill and promote corporate images, product awareness and help to build the overall company brand.

Seven roles of Social media in Marketing

  • Developing a business model involving social media for your small business: Your number one priority should be your business goals and objectives. Social media is not a quick fix for a broken business. It’s ok if skeletons fall out of your closet—own up to them, and be real about mistakes. Being transparent in social media gains trust.
  • Know your audience: Find out what they’re thinking. You have to understand how you can inspire them and genuinely help them. If you inspire your audience to connect with you and help them achieve their goals, then you will be successful.
  • Defining social media success: Social media success should be measured based on your goals and objectives first. It’s impossible to measure your progress if you don’t have clear goals. There are many different levels of measurement. Altimeter is useful because it categorizes by stakeholders and what they care about. Early metrics are different than later metrics when implementing social media. They are also different based on what the business role or leader is interested in. At some point, it has to generate some revenue. One thing that keeps a company from seeing profit is a lack of a real sales funnel. It’s not worth it if you’re not meeting your goals and objectives.
  • Effective tactics to get customers hooked: Getting to know your audience will help you better inspire and connect with them and you’ll be able to write more compelling and relevant content. Make sure your website and social media align with each other. Make them an offer they can’t refuse. It may not bring immediate ROI, but if they’re hooked it will pay off in the long run. You want them to profess their love for you, even though they may not buy from you. They will influence people who will buy from you.
  • Finding inspiration for marketing campaigns: Thought leaders, your community, and outside your virtual world are great places to find inspiration. Focus on your customers’ wants and needs. Make satisfying them your biggest priority and you set the market. Get away from the Tweet machine. Two hours at the mall, park, or beach can spark five blog post ideas. Inspiration can come from the energy of the campaign itself and what you can expect from the end result. When brainstorming for campaign ideas send a few tweets on the subject and write a blog post. Your audience will give you the answer.
  • Avoid Random Acts of Anything: RAM’s will eat your ROI for lunch and dinner and leave you with nothing. Random acts of anything are bad. The key to stomping them is integration and focus on your goals and objectives. People think integration takes more time, but once you get it going, it moves at turbo speed.
  • Marketing hurts your growth: Social Media Examiner recently posted that marketing hurts your company’s growth. Marketing sales messages are a thing of the past. Twitter, Facebook, and LinkedIn are not for broadcasting about your business. Use them to inspire and connect genuinely with real people. So many people fail at using social media because they can’t let go of the fact that it’s no longer a broadcast. If you don’t have time for conversation in social media, game over. Broadcast tweets will not connect you with real people. When you connect and add value for your audience, you earn the right to send a few broadcasts about yourself.

Wednesday, May 30, 2012

Marketing Methods & Trends in 2012

We are one year into a new decade and we have all seen the shift in how we market and reach consumers. In order to be efficient in marketing, it's important to realize what will work and what marketing methods are being left by the wayside. Now, with that being said please understand that my statement of trends is broad and may not reach your specific demographic. For example, if you serve a senior market a yellow page may very well still bring in customers for you, but if your customer is under the age of 60 it's best to put those dollar elsewhere. This year there are five marketing methods and trends that I'll be watching with a close eye. We've seen many changes over the last few years and this year will be no different. Trends and methods that I'll be watching closely this year include: Mobile Marketing In a report done by CTIA Wireless Association it was reported that 250+ million Americans carry mobile phones - that's over 80% of the nations population. Mobile applications will continue to be developed and smartphones and tablet PCs will remain a part of our daily lives. It's no longer just about mobile access to email, messaging, calendars and websites. We will see more location based services, mobile gaming, applications, and event-based mobile marketing. We've been inundated with new technology from Apple's iPhone, iPad and Google's Android integration. I guarantee it won't stop there, we will continue to see mobile marketing innovations throughout 2012 and beyond. We will see new devices, faster speeds, and location based technologies integrated with one another. If you are a marketer and you've not explored the avenue of mobile marketing, this is your year. Get on the bus or get left behind. Social Marketing Integration In 2011 companies began to take social media marketing seriously and because of that we saw social media explode as a marketing tool. This year we will begin to see companies heavily integrate social media into their overall marketing plan, which is how it should have been done in the first place, but better late than never. We will see social media expand from a tool used primarily for customer service and brand management to being used to collect customer data and enable better target marketing of products and services that those customer are interested. Traditional Marketing Continues to Diminishes This is always a touchy subject, because there are so many that don't want to say goodbye to the traditional marketing. Interactive or real-time marketing is easy to measure, engage and gain real time statistics that allows us to change a marketing message quickly. Customers are continuing to go online to search for information and in return making their purchases online. It's important that marketers move their marketing dollars to where the consumers are and right now that's making a gigantic shift to online. Internet marketing enables us to reach targeted audiences online, advertising costs are lower and they are easier to measure. What's not to love about interactive marketing? Overall marketing budgets will continue to shift to a higher spend online and the traditional marketing spend will continue to diminish. Consumers Will Determine Value In today's economy consumers are watching their pennies and because of this they will only spend on purchases that they consider to be of value. They will continue to seek value in every dollar spent and they will determine whether it's value, not you. Consumers no longer purchase just because an item is on sale, rather they will justify every dollar spent. This means you must marketing the value of your product or service in order to get consumers to open their wallets - if there is no value, they simply will not purchase. Regulations Abound
This is a trend that makes many of us as marketers anxious. It's been apparent in the last six months that the FTC is looking at regulating the online industry. We started a few years ago with disclosures for blog reviews and paid endorsements. As recent as the last month, we've seen the potential of SOPA passing. I'm not sure how this will play out in the next year and beyond, but I do believe we will see regulations implemented when it comes to the internet industry and many of those regulations will affect us as marketers. Relationships will Drive Loyalty and Sales I listed this last year, but I believe it will still hold true in 2012. Customers want to know they matter to you and your staff. They evaluate now more than ever how they are treated, whether or not your business cares about their satisfaction. Gone are the days that they just purchase out of convenience. If you can give the best customer care, you will find that you will create consumers that are loyal to you, regardless of whether or not you have the least expensive price. They realize that in tough economic times their loyalty to you could be the life or death of your business and that's often why they will go out of their way to spend their hard-earned dollars in your place of business - if you have helped in creating loyalty by giving them extraordinary care.

Monday, May 21, 2012

Trends of Digital Marketing

There’s no denying it, the world is rapidly shifting from analogue to digital. People are consuming more and more digital content on a daily basis – on mobile phones, laptops, desktop computers at work, and more – and companies that have not yet recognised this in their marketing strategies need to adapt fast. Why is digital marketing so important? Because it is not only a rapidly growing force in the current marketing playing field, it is set to be the future of marketing, and it seems likely that digital media will soon replace more traditional forms altogether. While older generations will no doubt lament the demise of paper-based newspapers, books, communication methods and traditional TV and radio broadcasts, those who have grown up with the internet and mobile phones as a God-given right are already embracing the brave new world of digital consumption.
The facts are that digital methods of communication and marketing are faster, more versatile, practical and streamlined, so it is perhaps unsurprising that once the technology became available we began quickly moving into the digital age. The good news is that digital offers just as much potential to marketers as it does to consumers. Before we look at the benefits of digital marketing, let’s take a quick snapshot of some of the key forms of it at present: Websites and SEO content Blogs Internet banner ads Online video content Pay-per-click (PPC) advertising Email marketing Social media marketing (Facebook, Twitter, LinkedIn, etc.) Mobile marketing (SMS, MMS, etc.) This is far from an exhaustive list, and new forms of digital marketing, such as augmented reality, are arriving all the time. So, why digital marketing? First of all, digital marketing is infinitely more affordable than traditional offline marketing methods. An email or social media campaign, for example, can transmit a marketing message to consumers for the merest fraction of the cost of a TV ad or print campaign, and potentially reach a wider audience. But one of the main benefits of conducting your marketing digitally is the ease with which results can be tracked and monitored. Rather than conducting expensive customer research, you can quickly view customer response rates and measure the success of your marketing campaign in real-time, enabling you to plan more effectively for the next one. Perhaps the strongest case for incorporating a digital element into your marketing is that digital media forms are quickly overtaking traditional forms of information consumption. According to the Office for National Statistics, over 82% of UK adults went online in the first three months of this year: that's over 40 million individuals. The bottom line is, the digital age is here, and those businesses that fail to adapt to the new marketing climate are at great risk of going extinct sooner rather than later.

Tuesday, March 20, 2012


The Concept Of Management By Objectives (MBO)

The concept of MBO is closely connected with the concept of planning. The process of planning implies the existence of objectives and is used as a tool/technique for achieving the objectives. Modern managements are rightly described as 'Management by Objectives' (MBO). This MBO concept was popularized by Peter Drucker. It suggests that objectives should not be imposed on subordinates but should be decided collectively by a concerned with the management. This gives popular support to them and the achievement of such objectives becomes easy and quick.

Management by Objectives (MBO) is the most widely accepted philosophy of management today. It is a demanding and rewarding style of management. It concentrates attention on the accomplishment of objectives through participation of all concerned persons, i.e., through team spirit. MBO is based on the assumption that people perform better when they know what is expected of them and can relate their personal goals to organizational objectives. Superior subordinate participation, joint goal setting and support and encouragement from superior to subordinates are the basic features of MBO. It is a result-oriented philosophy and offers many advantages such as employee motivation, high morale, effective and purposeful leadership and clear objectives before all concerned per-sons.

MBO is a participative and democratic style of management. Here, ample a scope is given to subordinates and is given higher status and positive/participative role. In short, MBO is both a philosophy and approach to management. MBO concept is different from MBC (Management by Control) and is also superior in many respects. According to the classical theory of management, top management is concerned with objectives setting, directing and coordinating the efforts of middle level managers and lower level staff. However, achievement of organizational objectives is possible not by giving orders and instructions but by securing cooperation and participation of all persons. For this, they should be associated with the management process. This is possible in the case of MBO and hence MBO is different from MBC and also superior to MBC.

MBO is an approach (to planning) that helps to overcome these barriers. MBO involves the establishment of goals by managers and their subordinates acting together, specifying responsibilities and assigning authority for achieving the goals and finally constant monitoring of performance. The genesis of MBO is attributed to Peter Drucker who has explained it in his book 'The Practice of Management'.

Definitions Of Management By Objectives MBO :-

1. According to George Odiome, MBO is "a process whereby superior and subordinate managers of an Organisation jointly define its common goals, define each individual's major areas of responsibility in terms Of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."

2. According to John Humble, MBO is "a dynamic system which seeks to integrate the company's needs to clarify and achieve its profits and growth goals with the manager's need to contribute and develop himself. It is a demanding and rewarding style of managing a business."

Features Of Management By Objectives MBO :-

1. Superior-subordinate participation: MBO requires the superior and the subordinate to recognize that the development of objectives is a joint project/activity. They must be jointly agree and write out their duties and areas of responsibility in their respective jobs.

2. Joint goal-setting: MBO emphasizes joint goal-setting that are tangible, verifiable and measurable. The subordinate in consultation with his superior sets his own short-term goals. However, it is examined both by the superior and the subordinate that goals are realistic and attainable. In brief, the goals are to be decided jointly through the participation of all.

3. Joint decision on methodology: MBO focuses special attention on what must be accomplished (goals) rather than how it is to be accomplished (methods). The superior and the subordinate mutually devise methodology to be followed in the attainment of objectives. They also mutually set standards and establish norms for evaluating performance.

4. Makes way to attain maximum result: MBO is a systematic and rational technique that allows management to attain maximum results from available resources by focussing on attainable goals. It permits lot of freedom to subordinate to make creative decisions on his own. This motivates subordinates and ensures good performance from them.

5. Support from superior: When the subordinate makes efforts to achieve his goals, superior's helping hand is always available. The superior acts as a coach and provides his valuable advice and guidance to the subordinate. This is how MBO facilitates effective communication between superior and subordinates for achieving the objectives/targets set.

Steps In Management By Objectives Planning :-

1. Goal setting: The first phase in the MBO process is to define the organizational objectives. These are determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members. In setting objectives, it is necessary to identify "Key-Result Areas' (KRA).

2. Manager-Subordinate involvement: After the organizational goals are defined, the subordinates work with the managers to determine their individual goals. In this way, everyone gets involved in the goal setting.

3. Matching goals and resources: Management must ensure that the subordinates are provided with necessary tools and materials to achieve these goals. Allocation of resources should also be done in consultation with the subordinates.

4. Implementation of plan: After objectives are established and resources are allocated, the subordinates can implement the plan. If any guidance or clarification is required, they can contact their superiors.

5. Review and appraisal of performance: This step involves periodic review of progress between manager and the subordinates. Such reviews would determine if the progress is satisfactory or the subordinate is facing some problems. Performance appraisal at these reviews should be conducted, based on fair and measurable standards.

Advantages of Management By Objectives MBO :-

1. Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor management by crisis. Managers are expected to develop specific individual and group goals, develop appropriate action plans, properly allocate resources and establish control standards. It provides opportunities and motivation to staff to develop and make positive contribution in achieving the goals of an Organisation.

2. Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals that identify desired/expected results. Goals are made verifiable and measurable which encourage high level of performance. They highlight problem areas and are limited in number. The meeting is of minds between the superior and the subordinates. Participation encourages commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic objectives is me benefit of M[BO.

3. Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance since goals are jointly set by superior and subordinates. The individual is given adequate freedom to appraise his own activities. Individuals are trained to exercise discipline and self control. Management by self-control replaces management by domination in the MBO process. Appraisal becomes more objective and impartial.

4. Raises employee morale: Participative decision-making and two-way communication encourage the subordinate to communicate freely and honestly. Participation, clearer goals and improved communication will go a long way in improving morale of employees.

5. Facilitates effective planning: MBO programmes sharpen the planning process in an Organisation. It compels managers to think of planning by results. Developing action plans, providing resources for goal attainment and discussing and removing obstacles demand careful planning. In brief, MBO provides better management and better results.

6. Acts as motivational force: MBO gives an individual or group, opportunity to use imagination and creativity to accomplish the mission. Managers devote time for planning results. Both appraiser and appraise are committed to the same objective. Since MBO aims at providing clear targets and their order of priority, employees are motivated.

7. Facilitates effective control: Continuous monitoring is an essential feature of MBO. This is useful for achieving better results. Actual performance can be measured against the standards laid down for measurement of performance and deviations are corrected in time. A clear set of verifiable goals provides an outstanding guarantee for exercising better control.

8. Facilitates personal leadership: MBO helps individual manager to develop personal leadership and skills useful for efficient management of activities of a business unit. Such a manager enjoys better chances to climb promotional ladder than a non-MBO type.

Limitations of Management By Objectives MBO :-

1. Time-consuming: MBO is time-consuming process. Objectives, at all levels of the Organisation, are set carefully after considering pros and cons which consumes lot of time. The superiors are required to hold frequent meetings in order to acquaint subordinates with the new system. The formal, periodic progress and final review sessions also consume time.

2. Reward-punishment approach: MBO is pressure-oriented programme. It is based on reward-punishment psychology. It tries to indiscriminately force improvement on all employees. At times, it may penalize the people whose performance remains below the goal. This puts mental pressure on staff. Reward is provided only for superior performance.

3. Increases paper-work: MBO programmes introduce ocean of paper-work such as training manuals, newsletters, instruction booklets, questionnaires, performance data and report into the Organisation. Managers need information feedback, in order to know what is exactly going on in the Organisation. The employees are expected to fill in a number of forms thus increasing paper-work. In the words of Howell, "MBO effectiveness is inversely related to the number of MBO forms.

4. Creates organizational problems: MBO is far from a panacea for all organizational problems. Often MBO creates more problems than it can solve. An incident of tug-of-war is not uncommon. The subordinates try to set the lowest possible targets and superior the highest. When objectives cannot be restricted in number, it leads to obscure priorities and creates a sense of fear among subordinates. Added to this, the programme is used as a 'whip' to control employee performance.

5. Develops conflicting objectives: Sometimes, an individual's goal may come in conflict with those of another e.g., marketing manager's goal for high sales turnover may find no support from the production manager's goal for production with least cost. Under such circumstances, individuals follow paths that are best in their own interest but which are detrimental to the company.

6. Problem of co-ordination: Considerable difficulties may be encountered while coordinating objectives of the Organisation with those of the individual and the department. Managers may face problems of measuring objectives when the objectives are not clear and realistic.

7. Lacks durability: The first few go-around of MBO are motivating. Later it tends to become old hat. The marginal benefits often decrease with each cycle. Moreover, the programme is deceptively simple. New opportunities are lost because individuals adhere too rigidly to established goals.

8. Problems related to goal-setting: MBO can function successfully provided measurable objectives are jointly set and it is agreed upon by all. Problems arise when: (a) verifiable goals are difficult to set (b) goals are inflexible and rigid (c) goals tend to take precedence over the people who use it (d) greater emphasis on quantifiable and easily measurable results instead of important results and (e) over-emphasis on short-term goals at the cost of long-term goals.

9. Lack of appreciation: Lack of appreciation of MBO is observed at different levels of the Organisation. This may be due to the failure of the top management to communicate the philosophy of MBO to entire staff and all departments. Similarly, managers may not delegate adequately to their subordinates or managers may not motivate their subordinates properly. This creates new difficulties in the execution of MBO programme.

Essential Conditions for Successful Execution / Implementation of MBO Or...

Q.How To Make MBO Effective?

1. Support from all: In order that MBO succeeds, it should get support and co-operation from the management. MBO must be tailored to the executive's style of managing. No MBO programme can succeed unless it is fully accepted by the managers. The subordinates should also clearly understand that MBO is the policy of the Organisation and they have to offer cooperation to make it successful. It should be a programme of all and not a programme imposed on them.

2. Acceptance of MBO programme by managers: In order to make MBO programme successful, it is fundamentally important that the managers themselves must mentally accept it as a good or promising programme. Such acceptances will bring about deep involvement of managers. If manages are forced to accept NIBO programme, their involvement will remain superfluous at every stage. The employees will be at the receiving-end. They would mostly accept the lines of action initiated by the managers.

3. Training of managers: Before the introduction of MBO programme, the managers should be given adequate training in MBO philosophy. They must be in a position to integrate the technique with the basic philosophy of the company. It is but important to arrange practice sessions where performance objectives are evaluated and deviations are checked. The managers and subordinates are taught to set realistic goals, because they are going to be held responsible for the results.

4. Organizational commitment: MBO should not be used as a decorative piece. It should be based on active support, involvement and commitment of managers. MBO presents a challenging task to managers. They must shift their capabilities from planning for work to planning for accomplishment of specific goals. Koontz rightly observes, "An effective programme of managing by objective must be woven into an entire pattern and style of managing. It cannot work as a separate technique standing alone."

5. Allocation of adequate time and resources: A well-conceived MBO programme requires three to five years of operation before it provides fruitful results. Managers and subordinates should be so oriented that they do not look forward to MBO for instant solutions. Proper time and resources should be allocated and persons are properly trained in the philosophy of MBO.

6. Provision of uninterrupted information feedback: Superiors and subordinates should have regular information available to them as to how well subordinate's goal performance is progressing. Over and above, regular performance appraisal sessions, counseling and encouragement to subordinates should be given. Superiors who compliment and encourage subordinates with pay rise and promotions provide enough motivation for peak performance.

360 Degree Appraisal

An appraisal made by top management, immediate superior, peers, subordinates, self and customers is called 360 Degree Appraisal. Here, the performance of the employee or manager is evaluated by six parties, including himself. So, he gets a feedback of his performance from everyone around him. This method is very reliable because evaluation is done by many different parties. These parties are in the best position to evaluate the employee or manager because they are continuously interacting and working with him. This method is mostly used to evaluate the performance of the employees. However, it is also used to evaluate other qualities such as talents, behaviour, values, ethical standards, tempers, loyalty, etc.
360 degree appraisal was first developed by General Electric (GE), USA in 1992. Today it is used by all major organisations. In India, it is used by Crompton Greaves, Wipro, Infosys, Reliance Industries, etc.

Six Parties In 360 Degree Appraisal

The six parties involved in 360 degree appraisal are :-

1. Top Management

The top management normally evaluates the middle level managers. However, in a small organisation, they also evaluate the performance of the lower level managers and senior employees.

2. Immediate Superior

The immediate superior is in a very good position to evaluate the performance of his subordinates. This is because they have direct and accurate information about the work performance of their subordinates.

3. Peers / Co-workers

Peer or colleagues also evaluate each other's performance. They work continuously with each other, and they know each other's performance. Peer evaluation is used mostly in cases where team work is important.

4. Subordinates

The Subordinates can also evaluate the performance of his superior. Now-a-days students are asked to evaluate the performance of their teachers.

5. Self Appraisal

In the self-appraisal, a person evaluates his own performance. He should be honest while evaluating himself. This results in self-development.

6. Customers

Customers can also evaluate the performance of the employees who interacts with them. This evaluation is best because it is objective. It is also given a lot of importance because the customer is the most important person for the business. Organisations use customer appraisals to improve the strengths and remove the weaknesses of their employees.
In addition to these six parties, appraisal can also be done by an Appraisal Panel. This panel consists of 5 to 6 different types of members. Outside Consultants are also used for conducting appraisals. In some cases, Personnel Department also conducts an appraisal of employees and managers.
360 Degree Appraisal is becoming more popular because many parties are available for evaluation. Therefore, there is no "bias" or "halo effect". Hence the evaluation will become more realistic.

Thursday, March 15, 2012


You are welcome to the very first section of the unit on entrepreneurship skills. As you will expect, this section introduces you to :-
1.the concept of entrepreneurship.
2.what we mean by entrepreneurship,
3. who an entrepreneur is,
4.characteristics of an entrepreneur,
5.the difference between an entrepreneur and a business person
6. sources of information for new entrepreneurs.

What is entrepreneurship?

Who is an entrepreneur?

An entrepreneur is a person who develops a new idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs. All entrepreneurs are business persons, but not all business persons are entrepreneurs. Let us now think of why all business persons are not entrepreneurs. Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a business person but not an entrepreneur. The entrepreneur, on the other hand is the business person who is not satisfied with his/her performance and therefore always finds ways to improve and grow.

Now let us consider the characteristics or some special qualities and strengths which make an entrepreneur different from a business person. It is important for us to note that a successful entrepreneur possesses the following characteristics.


An entrepreneur takes actions that goes beyond job requirements or the demand of the situation

Opportunity seeking

An entrepreneur is quick to see and seize opportunities. He/she does things before he/she is asked to work by people or forced by situation.


An entrepreneur is not discouraged by difficulties and problems that come up in the business or his/her personal life. Once she sets a goal she is committed to the goal and will become completely absorbed in it.

Information seeking

An entrepreneur undertakes personal research on how to satisfy customers and solve problems. He/she knows that different people have different capabilities that can be of help to them. He/she seeks relevant information from his/her clients, suppliers, competitors and others. He/she always wants to learn things which will help the business to grow.

Demand for quality and efficiency

An entrepreneur is always competing with others to do things better, faster, and at less cost he/she strives to achieve excellence.

Risk taking

Are you afraid of uncertainties? Then you cannot be an entrepreneur. Entrepreneurs are not high risk takers. They are also not gamblers; they calculate their risks before taking action. They place themselves in situations involving moderate risk so they are moderate risk takers.

Goal setting

An entrepreneur sets meaningful and challenging goals for him/herself. An entrepreneur does not just dream. Him/she thinks and plans what he/she does. He/she is certain or has hope about the future.

Commitment to work

An entrepreneur will work long hours after into the night just to be able to keep his/her promise to his/her client. He/she does the work together with his/her workers to get a job done. He/she knows how to make people happy to work for him/her due his/her dynamic leadership.

Systematic planning and monitoring

An entrepreneur plans for whatever he/she expects in the business. He/she does not leave things to luck. He/she plans by breaking large tasks down into small once and puts time limits against them. Since and entrepreneur knows what to expect at anytime he/she is able to change plans and strategies to achieve what he/she aims at.

Persuasion and networking

An entrepreneur acts to develop and maintain business contacts by establishing good working relationship. Uses deliberate strategies to influence others.

Independence and self confidence

Most entrepreneurs start business because they like to be their own boss. They are responsible for their own decisions.