Consumer Clinics

Another approach to demand estimation is consumer clinics. These are laboratory experiments in which the participants are given a sum of money and asked to spend it in a simulated store to see how they react to changes in the commodity price, product packaging, displays, price of competing products, and other factors affecting demand. Participants in the experiment can be selected so as to closely represent the socioeconomic characteristics of the market of interest. Participants have an incentive to purchase the commodities they want the most because they are usually allowed to keep the goods purchased. Thus, consumer clinics are more realistic that consumer surveys. By being able to control the environment, consumer clinics also avoid the pitfall of actual market experiments (read the post here), which can be ruined by ruined by extraneous events.

Consumer clinics also have serious shortcomings, however. First, the results are questionable because participants know that they are in an artificial situation and that they are being observed. Therefore, they are not very likely to act normally, as they would in a real market situation. For example, suspecting that the researches might be interested in their reaction to price changes, participant are likely to show more sensitivity to price changes than in their everyday shopping. Second, the sample of participants must necessarily be small because of the high cost of running the experiment. Inferring, however, a market behavior from the results of an experiment based on a very small sample can be dangerous. Despite these disadvantages, consumer clinics can provide useful information about the demand for the firm’s product, particularly if consumer clinics are supplemented with consumer surveys. 

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Consumer Surveys and Observational Research

Consumer Surveys involve questioning a sample of consumers about how they would respond to particular changes in the price of the commodity, incomes, the price of related commodities, advertising expenditures, credit incentives, and other determinants of demand. These surveys can be conducted by simply stopping and questioning people at a shopping center or by administering sophisticated questionnaires to a carefully constructed representative sample of consumers by trained interviewers.

In theory, consumer questionnaires can provide a great deal of useful information to the firm. In fact, they are often very biased because consumers are either unable or unwilling to provide accurate answers. For example, do you know how much your monthly beer consumption would change if the price of beer rose by 10 cents per 12-oz can or bottle? If the price of sodas fell by 5 cents? If your income rose by 20 percent? If a beer producer doubled its advertising expenditures? If the alcoholic content of beer were reduced by 1 percentage point? Even if you tried to answer these questions as accurately as possible, your reaction might be entirely different if actually faced with any of the above situations. Sometimes consumers provide a response that they deem more socially acceptable rather than disclose their true preferences. For example, no one would like to admit that he or she drinks 200 beers per month. Depending on the size of the sample and the elaborateness of the analysis, consumer surveys can also be expensive.

Because of the shortcomings of consumer surveys, many firms are supplementing or supplanting consumer surveys with observational research. This refers to the gathering of information on consumer preferences by watching them buying and using products. For example, observational research has led some automakers to conclude that many people think of their cars as art objects that are on display whenever they drive them. Observational research has also shown that consumer prefer to take several cold medicines, not just one. Observational research relies on product scanners which are increasingly found in stores and on people meters in homes. These make it possible for a company to learn overnight how a wide variety of products sell, the effectiveness of commercials, as well as television viewing patterns. Scanners and people meters, however, raise legal questions about privacy.

Observational research does not, however, render consumer surveys useless. Sometimes consumer surveys are the only way to obtain information about possible consumers’ responses. For example, If a firm is thinking of introducing a new product or changing the quality of an existing one, the only way that the firm can test consumer’s reactions is to directly ask them since no other data are available. From the survey, the researcher then typically tries to determine the demographic characteristics (age, sex, education, income, family size) of consumers who are most likely to purchase the product. The same may be true in detecting changes in consumer tastes and preferences and in determining consumers’ expectations about future prices and business conditions. Consumer surveys can also be useful in detecting consumers’ awareness of an advertising campaign by the firm. Furthermore, if the survey shows that consumers are unaware of price differences between the firm’s product and competitive products, this may be a good indication that the demand for the firm’s product is price inelastic. 

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Marketing Research Approaches to Demand Estimation

Marketing research is the process that links the consumers, customers, and end users to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.

Researching your market helps you target your ideal customer, identify new market opportunities and improve your sales performance. Successful businesses make regular market research the foundation of their marketing and sales planning. You can develop strong marketing strategies based on what you find out about your products and services, your customers, your competitors, your industry and the challenges in your marketplace.

Market research can also help you identify areas of your business that could be updated or changed. It's important to clearly define your market research goals so that you can give yourself the best chance of finding accurate and useful results.

The result of marketing result can be used for some business or sales planning, one of them is to demand estimation. Marketing research approaches is used as a method of estimating demand. The most important of these are consumer surveys, consumer clinics, and market experiments. I will explain them in different posts.

To learn more about these methods click the title below:

·      Consumer Surveys and Observational Research

·      Consumer Clinics

·      Market Experiments

I briefly examine these methods and point out their advantages and disadvantages and the conditions under which they might be useful to managers and economists. 

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Don't Hurt Your Finance By Budgeting Blunders

They say that what someone doesn't know won’t hurt them. Unfortunately, when it comes to money, this sentiment doesn't apply.

Emotional spending is common and can cause a big problem if you do it consistently. Too much emotional spending — and even one trip that results in particularly expensive purchases — can consistently derail a budget. It’s easy to rationalize spending when you are emotional, because sometimes spending in general, or indulging in a particular purchase, momentarily makes us feel better. However, when we make financial decisions based primarily on our emotions rather than our needs or budget, we later experience buyer’s remorse.

Everyone knows that a budget is the linchpin holding together your financial empire. If you don't have a budget, whether or not you know it yet, you have money problems. But to avoid money woes, it isn't enough to create a budget. You have to design one that works properly. That’s why you'd do well to steer clear of these five mistakes consumers often make when budgeting.

Creating the budget – then not tracking the budget. It's easy to say you're going to spend a certain amount on your mortgage, your cable bill and other fixed expenses. But as everyone knows, variable expenses like groceries and gas can really throw things off.

Tracking your cash isn't always easy to do. With so many supercenters like Walmart some people get a distorted view of what they are spending on groceries because when they go to the supercenter, they're purchasing a variety of items beyond groceries.

Only budgeting monthly. While most of your bills and expenses occur on a monthly schedule, there are some that might not fall neatly into that cycle. Leonard Wright, a San Diego-based member of the National CPA Financial Literacy Commission, points out that most people have quarterly, semiannual or annual expenses.

Not setting a realistic budget. If you're cash poor, it can seem irresponsible to budget for entertainment. So you don't. You plan for your mortgage or rent, your food, your utilities, gas and other essentials, and that's it. You will not budge from your budget.

So even if you don't plan on eating out or catching a movie, budget for the possibility. The worst that happens is you have money left over at the end of the month. If you don't budget for some extras, you'll probably end up doing something extra anyway, and that's where the trouble comes in.

Trouble also occurs when you’re not honest with yourself about how much you make – or don't make. This should go without saying, but some people develop their budget based on their gross and not their net. Working from gross is OK if you accurately reflect your tax liability. It is important to budget based on your take-home pay.

Not planning for emergencies. Even if you account for everything going on in your life, you need to plan for what hasn't happened. Someday, you will need a plumber. Or your home will be infested with termites. Or your car will need new brakes. Emergencies crop up, especially when you're living an active life.

If you're already living paycheck to paycheck, it may be impossible to put money aside every month for the possible flat tire or sudden operation. In fact, that may be what you use your credit card for. But if you have the money to put cash aside for life's bumps and bruises, that's an instant upgrade to your budget.

Not considering the true cost of a financial decision. Maybe you bought a house and knew you could handle the mortgage payments, but you didn't think about maintenance costs or the furniture you needed to purchase.

There are plenty of one-off purchases, like books and furniture, where you'll pay money once and never again, but a lot of items require maintenance or ongoing costs. Think printer ink, pet food, a smartphone.

If you live your life without consulting your budget, you really don't have a budget. You only have money problems, whether you know it yet or not.

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How to Reduce Stress Over Christmas with Time Management

Christmas can be a very stressful time of year.  For many the Christmas holiday period is a mass of complex social interactions with family or relatives, some of whom you may rather not see. There could well be expectations, or at least perceived expectations, to create a ‘wonderful Christmas’ with presents and perhaps the most important meal of the year. 

If you spend the Christmas holiday season rushing about like a panicked lemming, it's time to apply some time management strategies. There are just so many things to do, and a limited time to do them in. Working people may feel especially harassed, trying to cram Christmas activities into their already limited "leisure" time.

If you're one of those people feeling more frazzled than festive, taking the time to use a few time management strategies can really reduce stress over Christmas; you'll feel as if you're in control, rather than feeling like you're being driven like one of Santa's reindeer. If it's already too late, bookmark this page ready for next year and set yourself a reminder to do this in mid-November.

How to Reduce Stress Over Christmas? Apply Time Management Strategies.

1.       Make a list.

Divide a page into two columns. List the things you have to do to prepare for the holiday season, such as gift shopping, on one side of the page and the things you want to do, such as special holiday baking, on the other side of the page.

2.       Pick and choose your Christmas activities.

Many of us do what we do during the holiday season just because we always have, turning the entire month of December into a mad whirl of non-stop Christmas preparations and activities. It's time to make your list more manageable by eliminating some of these holiday activities.

Do you really need to spend hours writing and sending Christmas cards, for instance, or hours making hundreds of chocolate balls? By all means do if you enjoy these activities, but if you don't, give yourself more time to do the things you enjoy by cutting them from your list.

3.       Get an early start.

There's no rule that says that all Christmas activities have to be crammed into the week before Christmas. You can decorate your home for the holiday season in November if you want. Food for the holiday season can be bought in advance, and Christmas gifts can be bought any time of year. Stretching out your Christmas activities over a longer period of time can really help reduce stress.

4.       Get help.

Who says that you personally have to wrap all the Christmas gifts, do all the baking, and/or do all the holiday season decorating? This year, give yourself the gift of holiday stress relief by patronizing a local bakery, hiring a cleaning service to clean your home, use the gift wrapping services, or even having your holiday season party or festive dinner catered.

Think about how much your time (and sanity) is worth, and contract out accordingly. Assign some tasks to other family members. Using the time management strategies of outsourcing and delegation will lighten your workload and your mood.

5.       Break the Christmas gift shopping gridlock.

You don't have to take the time to drive anywhere to shop if you don't want to. Reduce stress by shopping and buying Christmas gifts online.

6.       Call ahead before you shop offline.

Why go six places looking for that one Christmas gift when you could just make a few phone calls, go to one place and pick it up?

7.       Avoid rushing around in a holiday frenzy.

To reduce stress, pre-plan and coordinate your journeys. You can easily combine running errands with Christmas shopping, for example, why go Christmas shopping 10 or 12 times? Use your list and make your calls to cut down on the hours you need to spend shopping.

8.       Turn chores into events.

Everyone finds some holiday season activities that have to be done drudgery. Make whatever it is you find drudgery more enjoyable by making it special and different. For example, make the Christmas baking a family affair, or invite some friends over for a tree-trimming night.

9.       Slow down.

For instance, you don't need to buy, put up, and decorate the tree all in the same day. Make the tree trimming as an ongoing event. Buy it, put it up, and set out the ornaments. Then whoever wants to hangs a few ornaments on the tree when they feel like it. Sometimes it takes two weeks, but it will be a beautiful, fully decked Christmas tree by Christmas Eve.

10.   Build time to relax and enjoy the festive season into your schedule.

Take the time to drive around and enjoy the incredible displays of Christmas lights, attend a special holiday concert, or just take a long hot bath. Your holiday stress will drop considerably.

11.     Plan ahead for the next holiday season.

Christmas supplies, such as decorations and gift wrap, are often available at discounted prices in the week after Christmas, and they don't go bad! It's easy enough too to buy Christmas gifts any time of year; all it takes is some planning.

The holiday season should be a joy, not an ordeal. Applying some time management strategies during the holiday season can help you regain the equilibrium you need to appreciate (and savor!) the true spirit of the season.

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Get Your Financial Health for 2015

Money worries? You're not alone. Financial stress — from job loss, credit card debt and retirement — is the second leading cause of stress in America. Beside that, a large spending on certain celebrations or holidays can also be a cause of money worries. The end of the year can be hectic. Between juggling parties, last-minute holiday shopping, travel and spending time with family and friends, the last thing we want to do is think about our financial health. While it’s tempting to put off reviewing your finances until the New Year, you might lose the opportunity to make some critical financial changes and save some serious dough before the clock strikes midnight on Dec. 31.

Stop worrying about your finances! Here are six easy ways to get your financial health in order for 2015:

1.   Review your spending. Analyze your spending patterns over the last few months. If you’ve gone a little overboard on holiday gifts or dining out, it might be time to revisit your budget. Review your financial goals from last year, and assess if you were successful in meeting those goals. You might also consider whether they will work for you in the coming year or if it is necessary to make adjustments. If you have yet to establish a budget, there is no better time than now to get started.

2.  Get a free credit report. Get your annual free credit report now so you know where you stand before heading into the New Year. Look over your report, and check for errors or negative information. If your credit history could use some improvement, make 2015 the year you get back on track.

3.    Develop a debt payoff strategy. Before heading into 2015, take the time to review your balances. If you have extra cash in the bank, it’s worth making a large payment toward cutting down your debt. If you can’t pay down a debt you accumulated this year, create a debt payoff plan that will get it down next year.

4.   Automate everything. If you haven’t already, now is the time to finally automate your bills and savings. The more you can automate, the easier your finances will be in 2015. Download a free bill payment app that will help you pay your bills on time and maintain a regular savings plan. This is also a good time to review and cancel any automatic subscriptions you aren’t using such as music streaming services, magazines, newspapers or premium subscriptions.

5.   Spend your FSA. Flexible spending accounts allow employees to set aside a portion of earnings tax-free to pay for qualified expenses, most commonly medical expenses and child care. So if you have an FSA for qualifying expenses, now is the time to submit any outstanding claims.

6.   Review your insurance plans and rates. Look over your health, life, homeowners, renters and car insurance plans. It’s easy to “set it and forget it” – and then end up with the same insurance carrier for years. If you have any changes coming in 2015 that you need to plan for, now is the time to shop around for new insurance plans and rates. 

With only a few days remaining in 2014, there’s no better time to give yourself a full financial review and make sure you’re doing all you can to set yourself up for success in 2015.

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How Business and Marketing are Changing?

We can say with some confidence that “the marketplace isn't what it used to be.” It is changing radically as a result of major societal forces such as technological advances, globalization, and deregulation. These major forces have created new behaviors and challenges:

Customers increasingly expect higher quality and service and some customization. They perceive fewer real product differences and show less brand loyalty. They can obtain extensive product information from the Internet and other sources, permitting them to shop more intelligently. They are showing greater price sensitivity in their search for value.

Brand manufactures are facing intense competition from domestic and foreign brands, which is resulting in rising promotion costs and shrinking profit margins. They are being further buffeted by powerful retailers who command limited shelf space and are putting out their own store brands in competition with national brands.

Store-based retailers are suffering from an oversaturation of retailing. Small retailers are succumbing to the growing power of giant retailers and “category killers.” Store-based retailers are facing growing competition from catalog houses; direct-mail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and the Internet. As a result, they are experiencing shrinking margins. In response, entrepreneurial retailers are building entertainment into stores with coffee bars, lectures, demonstrations, and performances. They are marketing an “experience” rather than a product assortment.

COMPANY RESPONSES AND ADJUSTMENTS

Companies are doing a lot of soul-searching, and many highly respected companies are changing in a number of ways. Here are some current trends:

§  Reengineering: From focusing on functional departments to reorganizing by key processes, each managed by multidiscipline teams.

§  Outsourcing: From making everything inside the company to buying more goods and services from outside if they can be obtained cheaper and better. A few companies are moving toward outsourcing everything, making them virtual companies owning very few assets and, therefore, earning extraordinary rates of return.

§  E-commerce: From attracting customers to stores and having salespeople call on offices to making virtually all products available on the Internet. Consumers can access pictures of products, read the specs, shop among on-line vendors for the best prices and terms, and click to order and pay. Business-to-business purchasing is growing fast on the Internet: Purchasing agents can use bookmarked Web sites to shop for routines items. Personal selling can increasingly be conducted electronically, with buyer and seller seeing each other on their computer screens in real time.

§  Benchmarking: From relying on self-improvement to studying “world-class performers” and adopting “best practices.”

§  Alliances: From trying to win alone to forming networks of partner firms.

§  Partner-suppliers: From using many suppliers to using fewer but more reliable suppliers who work closely in a “partnership” relationship with the company.

§  Market-centered: From organizing by products to organizing by market segment.

§  Global and local: From being local to being both global and local.

§ Decentralized: From being managed from the top to encouraging more initiative and “intrepreneurship” at the local level.

MARKETER RESPONSES AND ADJUSTMENTS

Marketers also are rethinking their philosophies, concepts, and tools. Here are the major marketing themes as the millennium approaches:

§  Relationship marketing: From focusing on transactions to building long-term, profitable customer relationships. Companies focus on their most profitable customers, products, and channels.

§  Customer lifetime value: From making a profit on each sale to making profits by managing customer lifetime value. Some companies offer to deliver a constantly needed product on a regular basis at a lower price per unit because they will enjoy the customer’s business for a longer period.

§  Customer share: From a focus on gaining market share to a focus on building customer share. Companies build customer share by offering a large variety of goods to their existing customers. They train their employees in cross-selling and up-selling.

§  Target marketing: From selling to everyone to trying to be the best firm serving well-defined target markets. Target marketing is being facilitated by the proliferation of special-interest magazines, TV channels, and Internet newsgroups.

§  Individualization: From selling the same offer in the same way to everyone in the target market to individualizing and customizing messages and offerings. Customers will be able to design their own product features on the company’s Web page.

§  Customer database: From collecting sales data to building a rich data warehouse of information about individual customers’ purchases, preferences, demographics, and profitability. Companies can “data-mine” their proprietary databases to detect different customer need clusters and make differentiated offerings to each cluster.

§  Integrated marketing communications: From heavy reliance on one communication tool such as advertising or sales force to blending several tools to deliver a consistent brand image to customers at every brand contact.

§  Channels as partners: From thinking of intermediaries as customers to treating them as partners in delivering value to final customers.

§  Every employee a marketer: From thinking that marketing is done only by marketing, sales, and customer support personnel to recognizing that every employee must be customer-focused.

§  Model-based decision making: From making decisions on intuition or slim data to basing decisions on models and facts on how the marketplace works.

Successful companies will be those who can keep their marketing changing as fast as their marketplace and marketspace. 

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The Societal Marketing Concept

Some have questioned whether the marketing concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? The marketing concept sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.

Consider the following criticism:

The fast-food hamburger industry offers tasty but unhealthy food. The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch fat. The products are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems.

Situations like this one call for a new term that enlarges the marketing concept. Among those suggested are “humanistic marketing” and “ecological marketing.” We propose calling it the societal marketing concept.

The societal marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer wan satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept. Two pioneers of the societal marketing concept are Ben &Jerry’s and The Body Shop. But, as recent events show, even they encounter difficulties.

These companies are practicing a form of the social marketing concept called cause-related marketing, Pringle and Thompson define this as “activity by which a company with an image, product, or service to market builds a relationship or partnership with a ‘cause,’ or a number of ‘causes,’ for mutual benefit.” They see it as affording an opportunity for companies to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe that costumers will increasingly look for demonstrations of good corporate citizenship. Smart companies will respond by adding “higher order” image attributes than simply rational and emotional benefits. Some critics, however, complain that cause-related marketing might make consumers feel they have fulfilled their philanthropic duties by buying products instead of donating directly to chosen causes. 

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The Body Shop

In 1976, Anita Roddick opened The Body Shop in Brighton, England, as a tiny storefront selling body lotions. Today The Body Shop boasts 1,500 branches in 47 countries. The company manufactures and sells natural-ingredient-based cosmetics in simple and appealing recyclable packaging. The ingredients are largely plant-based and often come from developing countries. All the products are formulated without animal testing. The company also helps developing countries through its Trade Not Aid mission, contributes to rain-forest preservation efforts, is active in women’s and AIDS issues, and set an example for recycling. Yet, like many businesses striving to be socially responsible and profitable, The Body Shop has faced intense scrutiny and suspicions about its ethics. It has also been the victims of its own success and has been edged out by younger, fresher protégés whom it inspired.

Competitors, such as Bath & Body Works, Aveda, and Origins, are all unhampered by an expensive social mission. Declining store sales, particularly in the United States, have jolted The Body Shop into some new management and marketing moves. Outspoken Anita Roddick has stepped down as CEO, although she is still actively involved in crafting the social agenda and developing new products. One of her initiatives, Hemp, a line of hempseed-oil body care products, promises to put The Body Shop in the spotlight again and rev up sales. Advocates of industrial hemp, a nonnarcotic relative of marijuana, say the fast growing crop provides an environmentally friendly alternative packaged and consistent with The Body Shop’s environmentally conscious philosophy. 

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Ben & Jerry's

Twenty years after Ben & Jerry’s Scoop Shop opened in Burlington, Vermont, sales have climbed to over $190 million. The company has more than 600 employees and 10 franchises. Why the appeal? For one thing, Ben & Jerry are masters creating innovative flavors such as Cherry Gracia and Chocolate Chip Cookie Dough. For another, customers know that 7.5 percent of the company’s pre-tax profits are donated to a variety of social and environmental causes. For a while it seemed the company could do no wrong. Then, in the mid-1990s, facing stiff competition in the super premium ice cream category, the company suffered a series of losses. It began a highly publicized search for a new CEO to lead the company. The choice, a McKinsey consultant, was greeted with high hopes but lasted only two years. Current CEO Perry Odak, who arrived in 1997, has steered the company back on track to an impressive 12 percent growth in 1998.

Odak has refined product lines, changed funky but confusing packaging, and tightened the company’s loose and often chaotic business practices. And for those fearing a sellout from Mr. Odak – whose resume includes a stint at U.S. Repeating Arms rifle makers – they need only consider this: Tightening the company’s business practices is not only improving the bottom line but also seems to be promoting performance when it comes to worthy causes. Elizabeth A. Bankowski, the company’s social mission director, said: “We now meet and identify social mission objectives by function, and it’s taken as seriously as every other business objective.” Since Odak took over the day-to-day management of the company, performance reviews even reflect how well employees identify and meet their social mission objectives. 

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INTRODUCTION

Everyone will always get in touch with things related to economic. For those who have their own business will always be concerned with management and marketing. Why do we always get in touch with economic in life? Even though we are not an economic student or never interested with economic issues or things like that.

Well, we need foods, clothes, houses, and many things. All activities to get all of them can be qualified as economic activities. Okay, to make it simple I say that we all need money to get those things I have mentioned. Money we have will be used for transactions to get your foods, clothes, houses, or any other things. Those transactions are economic things.

How about people who get their stuff by exchange it with other stuff? Hmm.. I guess it is barter, right? It is also economic activity. As long as you lost your belongings to get new or expecting things it can be called economic activities.

Well, don’t be confused. You may read some posts in this blog to know better about economic, management, marketing, or things like that. Most of posts may be referred to companies or people who have business but for you who don’t, it still worth it to read. It can open your mind about economic, management, marketing, and strategies or it might be inspired you to start your own business. Those two expecting effects are good to come and implemented together. I really hope I can share a lot of useful information and also news for you.

Alright, get your comfort position, open your mind, start reading and enjoy this blog! 

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