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See, Say, Market Recommendations

 

 

 

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See, Say, Market Recommendations

By Prakash Hegade

Shakespir Edition

Copyright 2017 Prakash Hegade

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This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please ask them to download an additional copy for each recipient. Please do not use the contents of this book without the author’s permission and reference.

 

 

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For any query or questions kindly mail: [email protected]

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See, Say, Market Recommendations

First edition

2017

 

Preface

 

Who recommended you to read this book?

*
p<>{color:#000;}. Man (or self discovered)? Or a Machine?

 

That is what we are going to talk mostly about. Or reach a conclusion of that kind.

 

We are fundamentally going to talk and discuss about the market which has buying, selling and other ‘ing’s. A market also has an interesting part – recommendations. With the evolution of market nature and kind, this books talks about how the system of recommendations has evolved. The challenge is for predicting and expecting what lies ahead in future of recommendation systems.

 

Knowing the market dynamics and behavior is natural part and parcel of everyone’s life. This book does not have any surprise elements of the market. It just puts the time line together and a summary in author’s perspective. There are some insights presented which might be observed by everyone in day-to-day life.

 

The text is also not location or geography specific. It is a generic summary of the context. The assumptions made are for a fair and square simple market definition.

 

I must say that this is not a management course study. It is not a case study to read, analyze and conclude. It is more of an essay which carries the view points of an individual. This is a by-product of a research work that I am doing for a project. It puts down some insights that the future market could bring. More like a non technical, generic, literature study.

 

However efforts have been put to make sure that this is not a sloppy research text but rather which tells a story to many readers who can come forward with different perspectives. If you find something worth discussing, debating or arguing, kindly reach me out through email.

01. Market – Definition

 

Investopedia [1] defines it as:

A market is a medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. This type of market may either be a physical marketplace where people come together to exchange goods and services in person, as in a bazaar or shopping center, or a virtual market wherein buyers and sellers do not interact, as in an online market.

 

The Business Dictionary [2] defines a market as:

An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter.

 

Markets include mechanisms or means for:

#
p<>{color:#000;}. Determining price of the traded item

#
p<>{color:#000;}. Communicating the price information

#
p<>{color:#000;}. Facilitating deals and transactions and

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p<>{color:#000;}. Effecting distribution.

 

The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it.

 

Dr. Philip Kotler defines marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.  Marketing identifies unfulfilled needs and desires. It defines measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”

 

The term, ‘market’ comes from the Latin ‘mercatus’ [18]. The earliest recorded use of the term ‘market’ in English, as of known and noted is in the Anglo-Saxon Chronicle of 963.

 

In very basic and simple terms,

A market has buying and selling as vital ingredients”

02. Producers and Consumers

 

The market is driven by producers and consumers based on the demand and supply. There is a demand from a consumer and those demands are fulfilled by the producers and so how the ends meet. However, market is about finding that right balance between that production and consumption (that need not be essentially called so). Not all the times they balance. When they don’t balance, the inventory comes into the picture. Inventory is like a queue to hold the items.

 

The expectations are not that they have to balance immediately. Products have expiry dates. They might be put to other use or thrashed after the expiry date. The loss rests on the producer in the case.

 

Even the nature has its own way of producing and consuming. That is how the ecology is balanced. Basically everyone is a producer and a consumer of one or the other good, be it from nature or man-made.

 

This kind of questions about, how can the production and consumption balance well in real markets? How can the technological advancements help in achieving it?

03. The Fish Market

 

Markets are known for the crowd and the noise. The markets of various kinds like vegetable market, fish market, agriculture market, flower market, books market etc have their own associated crowd, smell, dynamics etc. One cannot simply define a type of market in a sentence.

 

Most of the areas have popular markets for specific items. When consumers have a purchase, they know where exactly to go. When there is a market associated for a same produce with multiple shops, one can look and bargain for the best.

 

There are Flea markets [18] as well. It’s a type of market which rents the space to the people who want to sell their goods. Usually at such places the used goods, low quality items or high quality items at low prices are sold.

 

The type of markets is a ‘fish market’, if you know what I mean.

04. The Ancient History

 

Long ago in time, during the barter systems, people exchanged goods and services with other goods and services. After the money system came in, the trade began that way. Different things were valued with different prices and also based on the quality.

 

Markets have been existed from a very long time, basically for the trade. It was natural to giveaway the surplus. It was factual that people had several talents. The home made necessary things as well as agricultural products etc were traded.

 

People gathered on pre-defined specific days when trade happened. Everyone used to meet at a common ground for the give and take. (Casson and Lee: 2011) A study on the purchasing habits of the monks and other individuals in medieval England suggests that consumers were discerning. Purchase decisions were based on purchase criteria such as consumers’ perceptions of the range, quality, and price of goods. This informed decisions about where to make their purchases.

 

Markets have made people intelligent. They pick the best of the lot and it becomes the responsibility of the producer to produce the goods of kind, worth picky by the customers. It was a natural phenomenon that a word of mouth would spread the information about a particular good produce which advertised among others to buy the specific.

 

A producer would sure make his entire claim to sell his goods promising the quality but when it came from the users it made a larger impact. The one using a produce and recommending it to another was a major form of recommendation.

05. The Shops

 

With time people realized that there is a constant need to various goods for the daily life activities. That’s how the concepts of shop came into the picture which would be open on all the days as against a weekly or fortnightly trade meet. Naturally, the frequency of trade meet increased and it came to daily basis.

 

May be an outlet in front of home; that’s how it all started. Then the realization that a location amidst many users/inhabitants is much better place to sell a produce and achieved by opening a shop. When cities got developed with more facilities, shops to sell goods were a major contribution apart from government offices and services.

 

In those days, the shop keeper used to make some recommendations. The shop keeper had his own marketing strategies. Interaction with a customer and gestures of friendliness was a major strategy along with some reduced prices for regular customers. The delivery of better goods and services kept calling the customer back.

 

When the regular customers walk in, the shop keeper recommends with some new products or alternatives which have come up to be better ones than the previous. This recommendation would have been with two reasons. One is that the producer has promised to share some profit for the increased sales and to recommend only those products and other being the products are really good and the recommendations are made by shop keeper himself.

 

We are not trying to cover the entire shop dynamics here. We are only trying to pull out the necessary objectives on the recommendations part. The journey of shop owning becoming a profession would have been a curious case of study. There we see a transition of people selling their own goods to people selling goods which are collected from others.

06. The Super Markets

 

Bringing together the heads of all kinds under a single head, that’s what, was the concept of establishing super markets. The customer walks inside the shop to pick the goods of interest.

 

In the concept of shops, the customer would go with the needs to the shop and demand the need. With things being placed at visible site, the customer stands outside the shop and makes the demand. While in supermarket, it’s huge. The customer walks inside and picks the need all by him. The items are arranged in order and patterns to increase the accessibility. There is no talk or any kind of interaction here. The customer picks the need, gets them billed in the end and walks out.

 

Here there is no person standing to make the recommendations. Instead the neatly arranged shelves do that job even without uttering a word. The customer mostly ends up buying more than the desired most of the times.

 

While it is a shop, no one goes there just to stand and see. One can walk inside a super market just to kill some time and end up making some purchases. The neatly arranged shelves do the job of recommendation more than the way imagined and expected.

 

Supermarkets got a revolution. The customer has an advantage to pick many categories of produces at one single place. The purchase data of many customers are analyzed to see how to place the shelves so that the sale increases. The market basket analysis told the super market owners on how to arrange the shelves. That was recommendation, coming out from sales data analysis.

07. The Technological Step

 

The technology slowly barged in.

 

“As we go forward, I hope we’re going to continue to use technology to make really big differences in how people live and work” – Sergey Brin

 

Technology has brought in many changes in the society. It could be in the field of communication, education, information, health or any other sector, technology has made the impact.

 

According to (Brown: 2002) web has changed the way we work, the way of our education, and the ways in which people learn. He talks about the diffusion and absorption dynamics of the technology.

 

According to (Goldsmith and Wu: 2006) Internet frontier was designed to operate without government and borders but without government and borders the internet we know today would not be able to thrive. They further go and say, the success of internet and its companies depends on the stability of the country beneath it.

 

According to (Castells: 2000) knowledge and information seem indeed to be major sources of productivity and growth in advanced societies. Different forms of services have come up like producer services, social services, personal services and distributive services. Innovation has happened in product as well as process.

 

According to (Norris: 2001) technology has also created the Global divide: divergence of internet access between industrialized and developing countries. Social divide: gap between information rich and poor. Democratic divide: who do and do not use the panoply of digital resources to engage, mobilize and participate in public life.

 

(Fields: 2004, Aoyama: 2001) have described impact of technology on Business. They describe the way technology is used to reduce the gap between supply and demand, removing the intermediaries, customizing, standardization etc. And also explain the different trajectories which influence in diffusion of a technology.

 

As Sergey Brin quotes, technology has made difference in the way we live and work and will continue to.

08. Retail Business Process

 

According to (Jovarauskienė, Pilinkienė: 2009) due to intensive process of globalization and increasing extents of competition has led to prosperous conditions for the electronic business development. The basis of electronic business is application of information and communication technologies that has changed the usual conception of business and has formed the conditions for business development worldwide.

 

The word retail is from French origin. It means “sale in small quantities” [9]. As “your Dictionary” defines retail business is that which sells services and products to the final consumer [10].

 

The traditional retailing process can be explained in the following way (Burt, Sparks: 2003)

 

As seen in the above figure the process can be explained as the retailer first sources the products that he wants to sell. He takes care of stock allocation and manages his inventory and markets his product to the customers.

 

The customer picks up the product and that is how the goods get distributed. This is the nature of typical retail process.

09. Business to Consumer Model

 

A fundamental rule in technology says that whatever can be done will be done. – Andrew Grove

 

The business model connected with retail trade is the Business-to-Consumer model (B2C). As inventoryglossory.com [12] defines, in simple terms “B2C is an electronic Internet-facilitated medium where products or services are sold from a company to a consumer”.

 

According to (Jovarauskienė, Pilinkienė: 2009) the main principle of using this business model is connected with the efforts, which the company makes in order to give complete necessary information about its production or services to present or potential consumers, allowing them to order goods, to pay for them and expect future services. Electronic commerce introduced in business based on B2C model allows the company to control relations with customers more efficiently, to enhance the quality of ordered goods and services also to broaden audience of customers and, as a result, to increase the amount of selling.

 

New retail process with introduction of technology varies from the traditional retail process.

 

Following 2 paragraphs is the summary from Burt and Sparks: 2003

While sourcing the products retailers have always worked in partnership with selected suppliers. Today the internet has widened the scope and extended across the supply chain for that retailer. Retailers can share the techniques with their suppliers and/or to force them to use business practices that will help the retailer.

 

Stock allocation and inventory control has been technically complex and amenable to computer-based solutions. New model with technology provides potential gains in terms of the volume and location of inventory held and opportunities for better use of data to improve availability. In the area of marketing, the traditional retail boundaries of ‘‘store reach’’ have changed both temporally and geographically. Products can be marketed online through websites and advertisements and also customers can purchase products online. The Customer needs to select the goods he wants to purchase and the purchased item will be dispatched to the customer.

 

The New B2C model offers several advantages:

Firstly the retailer can reach worldwide market with unlimited volume of customers and market order processing is easier task than before [13].

 

Secondly customers’ product specific needs can be individually tailored. Companies can effectively differentiate themselves from mass-producing competitors: individually tailored products are often perceived as more attractive by customers and are not as easily comparable as mass-produced goods [14].

 

Thirdly production can ideally be geared to actual demand rather than to keeping the warehouse filled. The capital commitment and high costs associated with stock-keeping can effectively be reduced. Also no more sales or special reductions are required for selling-off surplus production [14].

 

Fourthly through customer feedback, new market opportunities can be discovered rapidly and the products adapted accordingly. It also helps in building a strong customer relationship [14].

 

Fifthly software’s like one used for eBilling allows companies to invoice their customers digitally, eliminating the old, time-consuming method of faxing or snail mailing an invoice [15].

 

Sixthly software like one used for Inventory management aids management to easily track investments and see where improvements might be made. If inventory is not tracked, it is impossible to accurately identify where money is being made and lost or to learn how to improve processes within a company to help it grow [16].

 

This process change which has happened by using technology in business is what we call as E-Business/E-Commerce.

10. Online, Almost Everything

 

We have reached a new era now where almost everything is available online. Technology has induced laziness to the society to sit at home and do all kinds of purchases for any kind of occasion. No need to commute to any place looking for the item and a specific market. Everything is available online at one shop.

 

One need not step out of the home looking for something. Necessitate is to own an electronic gadget and an application to provide marketing online. One needs to learn the usage of that application to get the job done. I had never imagined a day would come where one would buy fruits and vegetables online. Well now that is happening.

 

As a matter of fact, most of the marketing principles now need a change of medium. They don’t work as is. They need to be seen with the new environment. Classical theories need to be visualized in an appropriate context.

 

We are not here to discuss the pros and cons of online markets. They are going to thrive and expand. Research is trying to bring in the comfortableness to it. When a new generation grows up with online marketing, they are going to find it the natural way of shopping.

 

The generation which has seen the physical market and the online market might find the physical market to be more appealing. But the trend points that we are going to shift to everything online, possibly.

 

We never know the cycle, for when the online process will saturate and slowly physical market might turn to be an innovation and people slowly shifting back again seeing it as a new research discovery. But now, online market is the trend. Research there is the hot happening.

11. Sloppy Recommendations

 

Online shops have been hosted. What about recommendations? They have been lazy and sloppy. There is no one to talk like old shop days and there is no way to display the shelves like in super markets. You just see what is required and browse over the various listed out goods. A website on laptop might appeal to show something more but when a mobile application is used, there is a lot of space restriction on what to be displayed.

 

Where are the recommendations? What are they? Have they gone away? No. They haven’t. There is a display of all the related items. Say when I want to buy a mobile, I see recommendations of mobile case, screen guard, some USB drives, head sets, etc going with that specific product. There is also an association rules result which says, “Customers who purchased this also purchased this”.

 

The recommendations have been technically incompetent. Online markets have capability to build better recommendations. They are under research and on the way yet. When market is online, recommendation is one of the major marketing strategies. One needs to display the results that might really interest and excite the user. Just like one converses and picks up goods at shop, just like one looks at shelves and picks up at super market, online marketing should house such features building a friendly purchase environment.

12. Recommendations, the Expectations

 

Intelligence and Machine Learning. That is what the need of the hour is.

 

Technical Match

Can there be recommendations which actually match the technical specifications? Like if I purchase a camera, can I know what data formats it supports? Based on that technical compatibility, what other devices would be compatible?

 

Give and Take

Can one recommend a list of items to purchase, while a set of items is given as input by the customer? Like say if I give the format and shape of television stand, wall design, price, etc can I get an affordable television recommendation?

 

Expert Systems

Can one use an expert system and analysis to make a smarter recommendation? Can it see my environment and give me recommendations based on my current living condition? Can the expert system suggest me right paint for my wall color? Can it suggest the right color of dress to wear based on the climate?

 

Best Buy

It is not always the price factor. Giving a best buy should not be influenced only on the basis of product price. Price has to be yet another parameter and not the major parameter.

 

Apt and Wise

The recommendations must be more like, ‘If you have this, you might need this too’ and like, ‘If you go for this, you will have to go for this too’ and like, ‘if you have all this, you just need this’. Say for example, if I purchase a cake powder from a shop can I get the other ingredients recommendations to prepare the cake, automatically?

 

Formally Proved

Can we have recommendations which are formally proved to be correct? Logics and formal theories have been only in complex software earlier and now have moved down the line to every kind of system.

 

Science Principles

Can we have recommendations which satisfy the principles from science? It is not that user needs to know and made aware of the science behind. But they are needed to make the recommendations meaningful. Can we recommend a movie based on the plot of the movie rather than just going by similar rated users?

 

We have named and discussed a few based on the recent trends where recommendations are taking the path. And these are not some random claims. They are demands because the machines have the capability to produce them.

 

The need for smarter systems calls for a better research. One needs to dig out the principles of the real world and fit them inside the virtual world in the exact same way. One needs to make the machine see and act. One needs to make machine learn with an expert system which can tutor the machine to take wise decisions.

13. Concluding Thoughts

 

We have the data. We have lots of data on web. We need a better organization of it to achieve the better recommendations market. The web is striving for better organization and achieving the semantic web is in the same direction.

 

The data on web has to be knit together making web as one whole expert system. There is no better expert system than the web itself.

 

The Wikipedia definition [20] of recommendation system says:

Recommendation systems are a subclass of information filtering system that seek to predict the “rating” or “preference” that a user would give to an item. The rapidly evolving research is going to bring rapid changes to that definition.

References

 

[1] Investopedia, http://www.investopedia.com/terms/m/market.asp

[2] Business Dictionary, http://www.businessdictionary.com/definition/market.html

[3] John Seely Brown, “Growing up Digital”, USDLA Journal, ISSN 1537-5080, Vol. 16: No. 2.

[4] Manuel Castells, “The Rise of the Network Society”, Volume 1 of the Information Age: Economy, Society and Culture, Blackwell, 2000, pp. 216-354.

[5] Gary Fields, “Territories of Profit: Communications, Capitalist Development, and the Innovative Enterprise of G.F.Swift and Dell Computer”, Stanford University Press, 2004, pp. 63-219.

[6] Yuko Aoyama, “Structural Foundations for E-Commerce Adoption: A comparative Organization of Retail Trade between Japan and the United States”, Urban Geography, 2001, 22(2): 130-153.

[7] Jack Goldsmith and Tim Wu, “Who Controls the internet?”, Illusions of a borderless World, Oxford University Press, 2006.

[8] Pippa Norris, “Civic Engagement, Information Poverty and the Internet Worldwide”, Cambridge University press, 2001, pp. 1-193.

[9] eHow, http://www.ehow.com/facts_5124823_definition-retail-store.html

[10] your Dictionary, http://business.yourdictionary.com/retail

[11] Steve Burt, Leigh Sparks, “E-commerce and the retail process: a review”, Journal of Retailing and Consumer Services, 10 (2003), 275–286.

[12] Inventory Glossary, http://www.investorglossary.com/b2c.htm

[13] http://atlas.kennesaw.edu/~bmassing/webppt_files/v3_document.htm

[14] Configurator Database,

http://www.configurator-database.com/definitions/configurator/main-advantages-b2c

[15] eei platform, http://eeiplatform.com/1875/the-benefits-of-ebilling-software/

[16] eHow, http://www.ehow.com/about_5089095_benefits-inventory-management-software.html

[17] Donata Jovarauskienė, Vaida Pilinkienė, “E-Business or E-Technology?”, ISSN 1392-2785, ISSN engineering Economics, 2009. No 1 (61).

[18] Wikipedia, https://en.wikipedia.org/wiki/Market_(place)

[19] Casson, M. and Lee, J., “The Origin and Development of Markets: A Business History Perspective,” Business History Review, Vol 85, Spring, 2011.

[20] Wikipedia, https://en.wikipedia.org/wiki/Recommender_system

About the Author

 

 

Academician, always a research student and blogger who loves to read and write!

 

Twitter Handle: @itsPhTweet

 

 

 

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See, Say, Market Recommendations

We are fundamentally going to talk and discuss about the market which has buying, selling and other ‘ing’s. A market also has an interesting part – recommendations. With the evolution of market nature and kind, this books talks about how the system of recommendations has evolved. The challenge is for predicting and expecting what lies ahead in future of recommendation systems. Knowing the market dynamics and behavior is natural part and parcel of everyone’s life. This book does not have any surprise elements of the market. It just puts the time line together and a summary in author’s perspective. There are some insights presented which might be observed by everyone in day-to-day life.

  • Author: Prakash Hegade
  • Published: 2017-02-19 15:20:12
  • Words: 4205
See, Say, Market Recommendations See, Say, Market Recommendations