Definition for Risk in Insurance: Objective Risk, Subjective Risk

Definition for Risk in Insurance

There is no one definition for risk in insurance. Economists, behavioral scientists, risk theorists, statisticians, and actuaries all of them have their own view of risk. But, risk historically has been defined in terms of uncertainty. Based on this concept, risk is defined as uncertainty concerning the occurrence of a loss.

For example, the risk of being killed in a car accident is present because uncertainty is present. The risk of lung cancer for smokers is present because uncertainty is present. The risk of flunking a college course is present because uncertainty is present.
Employees in the insurance industry often use the term risk in a different manner to identify the property or life that is being considered for insurance.

For example, in the insurance industry, it is common to hear statements such as “that driver is a poor risk,” or “that building is an unacceptable risk.”

Finally, in the economics and finance literature, authors often make a distinction between risk and uncertainty. The term “risk” is often used in situations where the probability of possible outcomes can be estimated with some accuracy, while “uncertainty” is used in situations where such probabilities cannot be estimated.

1 As such, many authors have developed their own concept of risk, and numerous definitions of risk exist in the professional literature.

2 Because the term risk is ambiguous and has different meanings, many authors and corporate risk managers use the term “loss exposure” to identify potential losses. A loss exposure is any situation or circumstance in which a loss is possible, regardless of whether a loss occurs.

Examples of loss exposures include manufacturing plants that may be damaged by an earthquake or flood, defective products that may result in lawsuits against the manufacturer, possible theft of company property because of inadequate security, and potential injury to employees because of unsafe working conditions.

Finally, when the definition of risk includes the concept of uncertainty, some authors make a careful distinction between objective risk and subjective risk.

Definition for Risk in Insurance:Objective Risk

Objective risk (also called degree of risk) is defined as the relative variation of actual loss from expected loss . For example, assume that a property insurer has 10,000 houses insured over a long period and, on average, 1 percent, or 100 houses, burn each year. However, it would be rare for exactly 100 houses to burn each year. In some years, as few as 90 houses may burn; in other years, as many as 110 houses may burn. Thus, there is a variation of 10 houses from the expected number of 100, or a variation of 10 percent. This relative variation of actual loss from expected loss is known as objective risk.

Objective risk declines as the number of exposures increases. More specifically, objective risk varies inversely with the square root of the number of cases under observation . In our previous example, 10,000 houses were insured, and objective risk was 10/100, or 10 percent. Now assume that 1 million houses are insured. The expected number of houses that will burn is now 10,000, but the variation of actual loss from expected loss is only 100. Objective risk is now 100/10,000, or 1 percent.

Thus, as the square root of the number of houses increased from 100 in the first example to 1000 in the second example (10 times), objective risk declined to one-tenth of its former level.

Objective risk can be statistically calculated by some measure of dispersion, such as the standard deviation or the coefficient of variation. Because objective risk can be measured, it is an extremely useful concept for an insurer or a corporate risk manager. As the number of exposures increases, an insurer can predict its future loss experience more accurately because it can rely on the law of large numbers. The law of large numbers states that as the number of exposure units increases, the more closely the actual loss experience will approach the expected loss experience. For example, as the number of homes under observation increases, the greater is the degree of accuracy in predicting the proportion of homes that will burn.

Definition for Risk in Insurance:Subjective Risk

Subjective risk is defined as uncertainty based on a person’s mental condition or state of mind .For example, assume that a driver with several convictions for drunk driving is drinking heavily in a neighborhood bar and foolishly attempts to drive home. The driver may be uncertain whether he will arrive home safely without being arrested by the police for drunk driving. This mental uncertainty is called subjective risk.

The impact of subjective risk varies depending on the individual. Two persons in the same situation can have a different perception of risk, and their behavior may be altered accordingly. If an individual experiences great mental uncertainty concerning the occurrence of a loss, that person’s behavior may be affected.

High subjective risk often results in conservative and prudent behavior, while low subjective risk may result in less conservative behavior. For example, assume that a motorist previously arrested for drunk driving is aware that he has consumed too much alcohol. The driver may then compensate for the mental uncertainty by getting someone else to drive the car home or by taking a cab. Another driver in the same situation may perceive the risk of being arrested as slight. This second driver may drive in a more careless and reckless manner; a low subjective risk results in less conservative driving behavior.

Analysis,Budget,Inventory in E-commerce

SWOT Analysis

Your next step will involve taking a high-level, objective look at your business and its internal and external processes. By doing this, you will be able to discover the feasibility of e-commerce for your business. Just because you can create an online store does not always mean that it is in your best interest to do so. An excellent tool to help determine this is a SWOT Analysis. A SWOT Analysis is a study undertaken by an organization to identify its internal strengths and weaknesses as well as its external opportunities and threats. For instance, if you are a brick and mortar or click and mortar store, e-commerce will more than likely be an additional sales channel for your business, which can represent an opportunity. On the other hand, if you will be conducting all your e-commerce online, you will be considered a pure-play organization that can represent many strengths such as low overhead costs. Regardless of your business’s type, it is crucial that you learn about your business through your SWOT Analysis so that you can plan your strategy around it . If you search for SWOT Analysis in Microsoft Word, you will find a free PowerPoint and Microsoft Excel template. You can also Google to find many free step-by-step articles and tutorials.

Goal Setting

How will you know if your online store is a success or not? If you are like most people, you will probably say, “by looking at the volume of sales.” Although this is important, it is not the only measure of success. In addition to having an end goal, you will want to create some other goals to help evaluate your progress and success. We’ve all heard the saying, “A goal without a plan is just a dream,” and to have a positive return on investment (ROI), you need to establish some goals. As with any goals, they need to be

SMART:

• Specific
• Measurable
• Attainable
• Relevant
• Timely

These criteria will help you evaluate whether your goals are realistic or whether they need to be revised. Once you have created your goals, you must review them periodically to make sure that you are still on track.

Budget

Wouldn’t it be great if you didn’t have to worry about money? Absolutely! Unfortunately, being an entrepreneur or small business owners means that you must watch every dollar and use it wisely. One way to do this is by creating a budget. Establishing a budget is another critical component of your online store. We’ve all heard that it takes money to make money, but until you can get it flowing into your business on a consistent basis, you will want to create and stick to a budget. Although we will be using WordPress as our e-commerce solution, which is open source software and free, there are still other expenses that you might not be aware of that you will need to budget for such as:

• Web Hosting
• Domain Name
• SSL Certificate
• E-commerce Theme
• E-commerce Plugins
• Marketing tools and materials
• Search engine optimization
• Merchant account and fees
• Credit card fees
• Employee costs
• Warehouse space (if applicable)
• Analytics software to track visitors and their movements on your store

Of course, there will be more, but these are just a few to get you started. By being aware of them ahead of time, they won’t come as such a surprise when they occur. You will already be mentally and financially prepared. Throughout the book, we will discuss many of these budget items in detail.

Inventory

An online store is only as good as the items that it sells and who knows your catalog better than you. You probably already have a pretty good idea of the things that you want to sell. Typically, they will fall into one or all of these categories:

• Physical products
• Services
• Digital media

Offering physical products allow consumers to see images of the item before making a purchase. They also require shipping. From a business standpoint, you must determine which shipping methods will be used, along with the cost. You also must decide where you will store the products until they are purchased. If you operate a brick and mortar or click and mortar store, you already have inventory storage available. However, if you are a pure-play retailer, you will have to find a room, which could involve additional costs. With services, you don’t have to worry about storing or shipping anything. Services are intangible, so the only thing that needs to be provided is the service. Since mobile technology has made the shift to digital media products and services more accessible to retrieve and receive, you should determine whether your product offerings will consist of digital products, physical products, or a combination of the two. Based on your knowledge of your customer base, you should be able to decide.

Timeline/Project Schedule

In the IT field, whenever you ask someone, “What’s the deadline for this project?,” the answer was always “yesterday.” When it comes to launching your online store, you might feel the same way. However, if you want to make sure it is done the first time correctly, you will need a project plan or schedule. Otherwise, you can end up spending more time and money than you originally anticipated.

Most people think of Microsoft Project when they hear the words “project plan.” Although it is a useful project management tool with many advanced features and capabilities to use to plan your project, it is typically used in larger companies for larger projects. Occasionally, it can be overkill for smaller projects, especially if you don’t know how to use it correctly. Not to mention that there is also a learning curve that goes along with it that you don’t need while creating your online store. You need a simple way to record all the necessary tasks, their estimated duration and along with their start and end dates, and the person assigned to them. Depending on the size of your business, the person designated could be solely you or other people, but at least you will know. Some free and low-cost tools for creating your project schedule include:

• Microsoft Excel
• Libre Office Calc
• Google Sheets of GSuite
• Zoho.com
• Trello
• Basecamp
• Asana

Other online project management software can be found by Googling. Likewise, mobile apps can be found in Apple’s App Store or Google’s Play Store. It doesn’t matter what application you use if you are comfortable with using it. Once you have all your project tasks recorded, you will be able to determine a projected completion date for your online store. This date is not set in stone but gives you an idea of your potential time frame. Your project plan now becomes your road map and will guide you to the finish line. This plan must be reviewed and updated periodically to reflect your project’s progress accurately. Otherwise, it is an ineffective tool.

Planning is the cornerstone for any effective and successful e-commerce strategy. No one builds a house without a blueprint, and no one should build an online store without a plan. Nothing good ever comes from haphazardly creating an e-commerce strategy. Short-term results might be achieved, but for long-term results, a solid plan is a must. Other planning components that should be considered include:

• SWOT Analysis
• Goal Setting
• Inventory Selection
• Timeline/Project Schedule

By considering these components before launching an online store, you minimize the chances of wasting time and money.

Do we need E-commerce Strategy

Better understanding of e-commerce and its impact on local and global economies as well as local businesses. E-commerce retailers such as Amazon.com, eBay, and Walmart.com have dominated the virtual market-space and changed how consumers shop and how enterprises conduct business. You also learned more about its history than you probably wanted to know, but it helped you understand the foundation upon which the e-commerce that we know today is based. After reviewing its history and its current state, there is no denying that advances in technology have brought us to a place many never thought was possible. By now, you probably have already determined that you need to add e-commerce to your business, but you still might be unclear as to how to do that. Where should you begin?

Why Create an E-commerce Strategy?

The appeal of e-commerce’s low startup costs, ease of entry, and potential profits can make anyone want to immediately launch a web page with some PayPal “Buy” buttons on it and begin selling products and services online. Although this approach might yield some short-term sales, it might not be as successful in the long term. Why? It wasn’t based on a solid foundation that was well thought out and will eventually fail. Does the saying, “If you fail to plan, you plan to fail” ring a bell?

When deciding to implement an e-commerce strategy, planning is crucial. It allows you to take an eagle-eye view of your company and its products and services to determine the best way to present and sell them to your target audience. It also helps determine whether your products or services would be a good fit to sell online. Even though technology gives us the ability to create online stores to sell anything to anyone doesn’t necessarily mean that we should. Some things don’t sell well online. As a result, money and time are wasted trying to entice people to buy things that don’t interest them when it could have been better used elsewhere.

So, what makes a good plan? Before the days of global positioning systems (GPS) in cars and on mobile devices, we used good old-fashioned maps or an atlas to help guide us to our destinations. We’d unfold it, spread it out, and chart our course by identifying our starting as well as ending location. As we drove along, we would review the map to verify that we were traveling in the right direction before we veered too far off course. If we found ourselves lost, we would either pull over and look at the map again or ask for directions (depending on your sex). Once we were back on track, we felt confident and assured that we would reach our destination.

The same way that you would use a map or GPS for a trip, your e-commerce strategy would be your map. It will guide you to your end goal so that you can be successful. Along the way, you might venture off course, but you can always review your strategy and make the necessary corrections to get back on track. The good thing about your approach is that it not only meets your current needs, but it also anticipates and grows with your future needs. This is called scalability. According to Techopedia.com, scalability is “an attribute that describes the ability of a process, network, software or organization to grow and manage increased demand.” For instance, you might only have physical products to sell right now, but what if you want to sell digital products? Did you plan for this? Could your e-commerce solution handle this? These are the types of things that your strategy can help you identify so that you can acquire the necessary resources. A good strategy or plan is never complete. It is always a work in progress that must continuously be reviewed and updated.

Planning your e-commerce strategy also helps your business adapt to changing market conditions so that you can stay competitive. Within the e-commerce market space, competition is fierce and continuously evolving. Many brick and mortar businesses are steadily transitioning themselves into click and brick stores. Click and brick stores have physical store locations but also offer customers the ability to shop online and have items either shipped to their homes or picked up at a store location. Trends change so rapidly that you must stay well-informed of what is going on in the-market to compete for and hold on to your market share. Otherwise, you and your business could get left behind without a chance to recover. Before you know it, you could be forced out of business and left wondering what happened

Creating Your E-commerce Strategy

Before you begin creating your e-commerce strategy, you need first to ask yourself one vital question: Why do you want to sell items online? In other words, what’s your purpose for creating an online store? You might be wondering why you should ask yourself this question, but depending on your answer, it could save you some time and money and help predetermine your business’s e-commerce success or failure. E-commerce is not for the faint of heart. To be successful, it will involve a lot of research along with hard work. We look at success stories such as Amazon.com and think that we can do it too.

There is nothing wrong with having that positive vision, but we must realize that everyone wants to become the next Amazon. Just like Amazon didn’t become a success overnight, neither will you. Competition in the e-commerce marketspace is fierce. Success comes at a cost. You will pay your dues through trial and error, sweat, and tears until you perfect your strategy. Even though today’s e-commerce solutions such as Shopify and PayPal make it easier than ever to set up online stores, that’s only one piece of the puzzle. It will still take time to see success. Many businesses want to sell products or services online but haven’t thoroughly planned their strategy. This is like building a house without a blueprint. Who does that? Even though you might make a home, you don’t know if it was built correctly or how long it will remain standing. The same principle applies to creating an online store. By understanding your purpose for starting an online store, it will keep you focused on your end goal and not just profits. Not to say that gains are not essential, but to keep them consistently flowing, you must be diligent.

Real Estate, Evaluating Neighborhoods.

The reputation of particular neighborhoods can be based on many factors. Certain key or essential elements, which we discuss in these sections, differentiate the neighborhoods with good reputations and positive trends from the areas that are stagnant or trending the wrong direction.

Schools

If you don’t have school-age children, you may not be concerned about the reputation and test scores of the local schools. But, whether you’re investing in residential or commercial income properties, schools matter. The demand for residential and commercial property (and the subsequent value of the property) is highly correlated to the quality of local schools. Ask any real estate agent about the impact of schools on the demand and sales price for a home in a great school district. Likewise, employers use the Quality of local schools in recruiting their key personnel — and sometimes even relocate company facilities to be near areas known for their schools. The Internet can be a very useful tool in determining the quality of local schools. Most school districts have websites that include information on the test scores of their students for mandatory state and federal testing. Unfortunately, many people make snap judgments about school quality without doing their homework. Visit the schools and don’t blindly rely on test scores. Talk to parents and teachers, and discover what goes on at the school.

Crime rates

Crime can have a significant and sobering effect on the demand and desirability of all types of income properties. No one wants to live in a high crime area, and commercial tenants and their customers neither work at nor patronize unsafe businesses. No areas are going to be crime-free, but you don’t want to find out after the close of escrow that you have purchased a rental property that is claimed by rival gangs. Before you make your investment decision, consult these sources:

Local law enforcement: Contact local law enforcement and obtain the latest and historical crime statistics.
Local newspapers: Newspapers (and their websites) often have a police blotter section that provides information on major and even petty crimes in the community.
Sexual-offender databases: Laws require certain convicted sexual offenders to register with local law enforcement. These databases allow you to identify the general locations of convicted sex offenders who have committed sexual offenses against minors and violent sexual offenses against anyone. These databases aren’t foolproof. A few states haven’t been consistent in their efforts to maintain and make them available. Also, persons required to register don’t always follow the requirements, but at least you can find out about the known ones. Even if not legally required in your area, be sure to advise your tenants to check the database; this information is dynamic, and everyone needs to make his own decision about the safety of his family.

Pride of ownership

Pride of ownership is an intangible attitude that has tangible results. Pride of ownership also has no economic boundaries — even modest-income areas can really look sharp. Look for rental properties in neighborhoods that reflect pride of ownership — well-kept and litter-free grounds, trimmed plants, beautiful flowers, fresh paint, and so on. This curb appeal helps you attract and retain your tenants.

Although everyone may have a different perception of exactly what constitutes a well-maintained property, pride of ownership is readily apparent, and the effort made by business owners and homeowners to keep their properties looking sharp is important to real estate values. You may find that some of the more aesthetically pleasing areas look that way for a reason. Homeowner’s associations and business parks typically have a board of directors and architectural review committees that routinely inspect the properties under their jurisdiction, as well as review and restrict improvements to meet certain standards. Other areas may have informal committees of neighbors who band together to keep their properties in tiptop condition. This tendency is also true of multifamily residential and commercial properties, and these properties usually must also submit to local laws and regulations enforced by the building or code enforcement departments.

You can control the appearance, condition, and maintenance of your own property, but your options are limited if the properties surrounding it fall into disrepair. Your purchase of a fixer-upper and the investment of time, money, and sweat equity won’t be rewarded financially if the surrounding properties are in a state of disrepair and have owners who don’t really care.

Main Channels for Direct Marketing

Direct marketers use various channels for reaching their prospective customers. Such channels include:

FACE-TO-FACE SELLING

This procedure uses sales call and door-to-door retailing approach. Companies rely heavily on a professional sales force to locate prospects, develop them into customers and grow the business. They also use manufacturers representatives, sales agents to implement direct selling plans. This procedure enjoys wide applications such as - insurance agents, stockbrokers and sales agent working part-time or full-time for direct sales organization.

DIRECT MAIL MARKETING

Includes the dispatch of an offer, announcement, promotional message, reminder or other material to a customer or prospect at a particular geographical location. The direct marketer develops a selective mailing list, which can be used to dispatch letters, flyers, foldouts and other materials such as audio tapes, video tapes, and in some situations, computer diskettes to prospects and customers. The diskettes menu which is used usually for high-tech products provides technical information and visual graphics about the product with answers to frequently asked questions, relating to the product.

Direct mail is a popular medium because it permits high target-market selectivity. It can be personalized and is flexible - it allows early testing and response measurement, though it costs per thousand people reached is higher than using mass media, the people reached are much better, quality prospects.

INFLUENCE OF ELECTRONIC MAIL ON DIRECT MARKETING

The advent of electronic mail systems has changed the mailing procedure. Instead of hand delivery mails, more direct marketers now use electronic mailing system. Three new types of electronic mail delivery are now commonly used, such as:

1.FAX MAIL Fax machines enable one part)- to send a paper based message to another party over telephone lines. The message contents can be sent and received almost instantaneously. Marketers use fax mail to announce offers, sales events to prospects and customers through fax machines. Fax numbers of companies and individuals are now available from published directories but some prospects and customers may dislike receiving fax mail without prior notice from the marketer.

2.E-MAIL OR ELECTRONIC MAIL: allows marketers to send a message or file from one computer directly to another computer. The message arrives almost instantly and may be stored until the receiving person retrieves the message from his computer. Some e-mail programmes, offer notification feature which announces the arrival of new messages. There are software programs to sort out the more important messages from those which can be ignored or discarded. Marketers use this system to publish sales announcements, offers and other messages.

3.VOICE MAIL: is a system for receiving and storing oral messages at a telephone address. Telephone firms sell this service as a substitute for answering machines. The person with a voice mail account can check messages by dialing into the voice mail system and punching in a personal code. Marketers have set up programs that can dial a large number of telephone lines and leave the selling message in the recipients voice mail boxes. Direct mail marketers can construct an effective direct mail campaign by deciding on campaign objectives, target markets and prospects, offer elements, means of testing the elements and measures of campaign success.

DIRECT RESPONSE ADVERTISING

All forms of advertising done in direct marketing are regarded as direct-response advertising.

MAIL ORDER ADVERTISING: is a method of bringing goods from sellers to buyers by direct selling through catalogs.

DIRECT MAIL ADVERTISING: is an advertising medium for delivering message. These differentiation's should be understood clearly to avoid mixing up their meaning during usage.

DIRECT MAIL IS A MEDIUM, one of several used in DIRECT RESPONSE ADVERTISING, a method of selling goods and services by DIRECT MARKETING.

DIRECT RESPONSE COPY

Direct response copy written for direct mail has a different format from copy written for publication advertising Direct response publication copy has a strong promise-of-benefit headline to attract immediate attention. It is done in a news of a special value to attract a selected type of audience. Subheads appear frequently, describing the offer in a different way. This is immediately followed by an abundance of dear copy, spelling out details of the offer. Provision of information is made about all forms of evidence available to give assurance to the reader, specify money-back guarantees and close with a special bonus for promptness in replying. The order form should be big enough for the reader to fill out easily. Terms should be clearly presented, including handling and shipping charges, approval offers or money-back guarantees and use of credit cards if allowed. It is available for marketer to use professional services for the preparation of direct response copy or messages.

CATALOG MARKETING (MAIL-ORDER CATALOG )

Catalog marketing occurs when firms mail one or more products catalogs to selected prospects or potential customer or addresses who have a high probability of placing an order. The seller mails a catalog to a selected list of customers and also makes the catalog available on the company premises. Big merchandisers operate catalog counters in their stores and catalog offices in small communities where customers can visit to examine the catalogs and place orders. The customers order is dispatched from a central warehouse to these catalog office location, upon the arrival of the goods, the customer is phoned and asked to take delivery of his orders.

TELEMARKETING

Is defined as a marketing communication system using telecommunication technology and trained personnel to conduct planned, measurable marketing activities directed at targeted groups of consumers.Direct marketer uses the telephone to sell direct to customers. Some telephone marketers have developed computerized phoning systems where households are dialed automatically and computerized Message presented. Telemarketing has become a major direct marketing tool used for selling products and services.Effective telemarketing depends on choosing the right telemarketers, training them well and providing

Incentives to perform. Telemarketers should have pleasant voices and show enthusiasm. Women are more effective than men for many products. New telemarketers may, at the beginning, train with a script and eventually advance towards more improvisation. The opening lines are critical; they should be brief and lead with a good question that catches the listeners interest. The telemarketer needs to know how to end the conversation if the prospect seems to be a poor one. The call should be made at the right time, that is, late morning and afternoon to reach business prospects and evening hours to reach households. The telemarketing supervisor can build up telemarketers’ enthusiasm by offering prizes to the best or top performer or the first one who gets an order. An accurate and adequately selected telephone list is very essential in telemarketing.

CONSULTATIVE SELLING

The technique of consultative selling would be useful to a telemarketer. Consultative selling technique puts an emphasis on what the customer needs and wants. It involves listening more than talking; objections are addressed, not overcome. The seller asks a series of questions to find out if and how the seller’s product, service or idea will help the prospect. The questions are probing and open-ended. The telemarketer looks for needs and desires that are not being met or that can be met more fully, a greater part of this process requires that the telemarketer listens actively. Telemarketing program can be used to assist business in its marketing functions. Benefits that a firm can derive include:

• Increased potential customer sales
• Sales upgrading
• Encouragement of multiple orders
• Old accounts reactivation
• Support for the current sales team

DIRECT MARKETING THROUGH TELEVISION

Television is used in three ways to market products directly to consumers. These ways are:

1. Direct-Response Advertisin
2. At-home Shopping Channels
3. Videotex

DIRECT-RESPONSE ADVERTISING

Marketers air television spots, often 60 to 120 seconds long, that persuasively describe a product and provide customers with telephone number which is toll-free for ordering or where a customer has to pay for telephone an incentive may be given to encourage prospects call.

AT-HOME SHOPPING CHANNELS

These are entire television channels dedicated to selling goods and services, which broadcast 24 hours a day. These channels show home shopping programs, with the program host offering bargain prices on various products. Viewers are asked to call a toll-free telephone number to place order for goods. Orders are dispatched and delivered within a short time, usually 48 hours.

VIDEO TEXT

The consumers television set is linked with a sellers computer data banks by cable or telephone lines. The video text service consists of a computerized catalog of products offered by producers, retailers, banks, travel organizations and others. Consumers place orders through a special keyboard device connected to the system by two-way cable.

DIRECT MARKETING THROUGH PRINT AND RADIO

MAGAZINES, NEWSPAPERS and RADIO can also be used in direct-response selling channels. The buyer hears or reads about an offer and dials a toll-free number to place an order.

KIOSK MARKETING

A few companies have designed "customer-order-placing machines" called KIOSKS. These machines are placed in stores, airports and other locations to take orders from customers. For example, a shoe company based in the U.S named Florsheim Shoe company includes a machine in several of its stores in which the customer indicates the type of shoe he wants, along with the color and size. Pictures of Florsheim shoes appear on the screen that meet the customer’s criteria. If the particular shoes are not available in the store, the customer can dial an attached phone and type in his credit card number and where the shoes should be delivered. This method is different from vending machines, which dispense actual products.

AUTOMATIC VENDING MACHINE

Automatic vending machine is operated with coins, which are dropped into the machine and actual products are dispensed by the machine directly to the customer. Automatic vending machine is also called automatic merchandising or ROBOT RETAILING.

ONLINE DIRECT MARKETING CHANNEL

Is one that a person can reach through computer and modem. A modem connects the computer to a telephone line so that the computer user can reach various online information services. Online services are now available in some banks in Nigeria.

What is Direct Marketing ?

Direct Marketing Process

Direct marketing is the process involved in the selling of goods and sen-ices without the aid of wholesaler or retailer and such activities include direct response advertising, advertising for leads which sales people can follow through to achieve sales. Direct door-to-door selling is also part of direct marketing process.

Direct marketing uses various media such as direct mail, publications, television, radio and computer network Direct marketing is being increasingly used to replace mail-order business.

Definition of Direct Marketing

The Direct Marketing Association of U.S.A has defined direct marketing thus:

DIRECT MARKETING is an interactive marketing system that uses one or more advertising media to effect a measurable response and, or transaction at any location, with this activity stored on database. A critical evaluation of this definition indicates an emphasis laid on a measurable response such as typical customer order. This makes direct marketing to be sometimes, called DIRECT ORDER MARKETING.

Direct marketers use this process to build long term relationship with customers by occasionally sending birthday cards, informational materials or small premiums to selected members among st their customer. For example: hotels, airlines and some other businesses through frequent award programs, use this procedure to create and maintain strong customer relationships - such process is referred to as DIRECT RELATIONSHIP MARKETING.

Points of direct marketing

-Direct marketing consists of any marketing that relies on direct communication or distribution to individual consumers, rather than through a third party such as mass media.
-The call to action is a common factor in much of direct marketing.
-The effectiveness of direct marketing is easier to measure than media advertising.

How direct marketing works?

Unlike traditional public relations campaigns pushed out through a some party like as media publications or mass media , direct marketing campaigns operate by-self or independently to directly communicate with target audiences.

In direct marketing, companies cast their messaging and sales sto ries by social media, email, mail, or phone/SMS campaigns. Although the number of communications sent can be massive, direct marketing often attempts to personalize the message by inserting the receivers name or city in a prominent place to increase engagement.

The call to action is a crucial part of direct marketing. The receiver of the message is urged to immediately act by calling a toll-free phone number, sending in a reply card, or clicking on a link in a social media or email promotion. Any response is a positive indicator of a prospective purchaser. This variety of direct marketing is often called direct response marketing.

The Advantages and Disadvantages of Direct Marketing

Direct marketing is quite possibly the most well known and viable marketing devices to set up a direct association with an intended interest group. Direct marketing has its allure, especially to organizations on a tight spending who can't stand to pay for TV or Internet publicizing campaigns. Particularly as the world turns out to be progressively associated through advanced stages, web-based media turns into a powerful method to market to clients.

The fundamental downside with direct marketing, in any case, is the profile-raising and picture constructing that accompanies an outsider certifying your image. For instance, albeit an organization may pay for a supported article in The New York Times, this can extraordinarily upgrade a brand's picture and can help "do what needs to be done" with clients who will confide in an evidently fair source or outside assessment.

By its inclination, the adequacy of a direct marketing campaign is simpler to gauge than different kinds of publicizing, since brands can investigate their own examination, track exceptional source codes, and change systems viably without going through a go between. The organization can gauge its prosperity by the number of shoppers settle on the decision, return the card, utilize the coupon, or snap on the connection.

What Affects Wireless Signals?

Because wireless signals travel through the atmosphere, they are susceptible to different types of interference than are standard wired networks. Interference weakens wireless signals and therefore is an important consideration when working with wireless networking.

Interference

Wireless interference is an important consideration when you plan a wireless network. Interference is, unfortunately, inevitable, but the trick is to minimize the levels of interference. Wireless LAN communications typically are based on radio frequency signals that require a clear and unobstructed transmission path. The following are some factors that cause interference:

Physical objects: Trees, masonry, buildings, and other physical structures are some of the most common sources of interference. The density of the materials used in a building’s construction determines the number of walls the RF signal can pass through and still maintain adequate coverage.

Concrete and steel walls are particularly difficult for a signal to pass through. These structures weaken or at times completely prevent wireless signals.

Radio frequency interference: Wireless technologies such as 802.11n can use an RF range of 2.4 GHz, and so do many other devices, such as cordless phones, microwaves, Bluetooth devices, and so on. Devices that share the channel can cause noise and weaken the signals.

Electrical interference: Electrical interference comes from devices such as computers, refrigerators, fans, lighting fixtures, or any other motorized devices. The impact that electrical interference has on the signal depends on the proximity of the electrical device to the wireless AP. Advances in wireless technologies and in electrical devices have reduced the impact that these types of devices have on wireless transmissions.

Environmental factors: Weather conditions can have a huge impact on wireless signal integrity. Lightning, for example, can cause electrical interference, and fog can weaken signals as they pass through.

Reflection, Refraction, and Absorption

It can be a blurry line differentiating between interference and reflection when it comes to wireless networking. The key difference between them is that interference is a conflict with something else (usually another signal), whereas reflection is a problem caused by a bouncing of the same signal off of an object. A subset of this is refraction, which involves a change in direction of the wave as a result of its traveling at different speeds at different points. Put in simple terms, reflection happens when the signal hits a piece of metal and cannot pass through, and refraction happens when the signal goes through a body of water.

If the wave is completely swallowed by the object it hits (not reflected, or refracted), then it is said to be absorbed. Where security is concerned, items known to absorb wireless signals can be used to prevent the signal from traveling beyond an established perimeter. Shielding paint (sometimes called RF paint) can be used for this purpose, as can copper plates and aluminum sheets. Many wireless implementations are found in the office or at home. Even when outside interference such as weather is not a problem, every office has plenty of wireless obstacles. Table below highlights a few examples to be aware of when implementing a wireless network indoors.

Like any other network medium, APs have a limited transmission distance. This limitation is an important consideration when you decide where an AP should be placed on the network. When troubleshooting a wireless network, pay close attention to how far the client systems are from the AP.

When faced with a problem in which client systems cannot consistently access the AP, you could try moving the AP to better cover the area, but then you may disrupt access for users in other areas. So what can be done to troubleshoot AP coverage?

Depending on the network environment, the quick solution may be to throw money at the problem and purchase another access point, cabling, and other hardware to expand the transmission area. However, you can try a few things before installing another wireless AP.

The following list starts with the least expensive solution and progresses to the most expensive:

Increase transmission power: Some APs have a setting to adjust the transmission power output (power levels). By default, most of these settings are set to the maximum output; however, this is worth verifying just in case. You can decrease the transmission power if you are trying to reduce the dispersion of radio waves beyond the immediate network. Increasing the power gives clients stronger data signals and greater transmission distances.

Relocate the AP: When wireless client systems suffer from connectivity problems, the solution may be as simple as relocating the AP. You could relocate it across the room, a few feet away, or across the hall. Finding the right location will likely take a little trial and error.

Adjust or replace antennas: If the AP distance is insufficient for some network clients, it might be necessary to replace the default antenna used with both the AP and the client with higher-end antennas. Upgrading an antenna can make a big difference in terms of transmission range. Unfortunately, not all APs have replaceable antennas.

Signal amplification: Radio frequency (RF) amplifiers add significant distance to wireless signals. An RF amplifier increases the strength and readability of the data transmission. The amplifier improves both the received and transmitted signals, resulting in an increase in wireless network performance.

Use a repeater: Before installing a new AP, you might want to think about a wireless repeater. When set to the same channel as the AP, the repeater takes the transmission and repeats it. So, the AP transmission gets to the repeater, and then the repeater duplicates the signal and passes it on. This is an effective strategy to increase wireless transmission distances