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Marketing
Marketing: The process by which companies create value for customers and build strong customer relationships in order to
capture value from customers in return.
According to The Chartered Institute of Marketing (CIM).
Marketing is the management process for identifying, anticipating and satisfying customer requirements profitably.
According to American Marketing Association
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and society at large. (Approved October 2007)
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MkIS Functions
According to Alzabi (2010). the functions of MkIS are :
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Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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1. Restrictions on the time allocated for the manager to make decisions and the speed needed to
make many decisions.
2. The diversity and complexity of marketing activities and it's increase in depth.
5. Shortage in energy and other raw material resources necessary for the industry.
MkIS Models:
Kotler (2012) defines the Marketing Information Systems as an interacting structure of people, equipment
and procedures to gather sort, analyze, evaluate and distribute, timely and accurate information for use by
marketing decision makers to improve their marketing planning, implementation, and control" (Kotler, 2012).
Kotler model for MkIS
(Perreault and McCarthy, 2003), "A Marketing Information System is an organized way of continually gathering
and analyzing data to provide marketing managers with information they need to make decisions. Perreault and
McCarthy added, that in some of the companies an MkIS is setup by the marketing managers, where in other
companies the system is setup by a group that provides information to every department inside the firm.
A decision support system (DSS) is a computer-based information system that supports business or
organizational decision-making activities. DSSs serve the management, operations, and planning levels of an
organization and help to make decisions, which may be rapidly changing and not easily specified in advance.
Marketing intelligence (MI) is the everyday information relevant to a companys markets, gathered and
analyzed specifically for the purpose of accurate and confident decision-making in determining market
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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McCarthey and Perreault (1993) specified the elements of the MkIS to be as shown below
Figure (2.3): elements of MkIS
Pride and Ferrell(1987), defined MkIS as "the framework for the day-to-day managing and structuring of
information gathered regularly form sources both inside and outside an organization".
Figure (2.4): Albaum and Duerr MkIS model
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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All the above models include collecting information and analyzing the data. Kotlers MkIS model will be used
in this research.
Components of MkIS
1 Technology
The new technology is surrounding us in all aspects of life nowadays. The computers are one major
technological innovation that is helping most of the people. The people use it to communicate, the students use
them to learn and the firms use them to store and analyze information. The technology has changed over the
years and will continue to change.
A. Development of Computing Technology
The electronic are modern invention, although their manual predecessors go back to several centuries, where
Pascal and Leibnitz developed the first calculating machine in the seventeenth century (Curtis and Cobham,
2005). Curtis and Cobham (2005) added that the first generation of the electronic computer was built in the
1940s, the second generation was built in the 1960s using the solid transistors, the third generation was the
minicomputers, and the fourth generation is the microchip generation.
Information Technology Components
B. Hardware
"Hardware refers to the physical components within a computer system" ( Boddy et al. 2005). Laudon and
Laudon (2010) defined hardware as the physical equipment used to inputting the data and outputting the results.
They also added that the hardware consists of input, output, and storage devices; computer processing unit, and
the media to link the devices together. At the same time, Haag and Cummings (2010) simply defined hardware
as the physical devices that form the computer. According to Haag and Cummings (2010) and Boddy et al.
(2005) , the hardware consists of the following:
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Input Devices : Any tool used to enter information or command.
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Output Devices : Any tool that recognizes the results of the process.
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Storage Devices : Tools used to store information for later use.
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Central Processing Unit : Control the computer system and manipulates data.
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C. Software
"Software is a set of instructions written in a specialized language that controls the operation of the computer."
(Boddy et al., 2005). Laudon and Laudon (2006) defined the software as detailed programmed instructions that
control and coordinate the computer hardware components in an information system. Curtis and Cobham (2005)
defined software as "the general term for instructions that control the operation of the computer". The software
is divided into two main groups (Boddy et al., 2005) and ( Haag and Cummings, 2010):
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1. System Software: Programs that manage the resources of the computer, and handles tasks
specific to technology management.
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2. Application Software: Software that enables the user to perform specific tasks, and solve certain
problems.
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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2 Internal Records
Kotler and Keller (2009) mentioned that "Marketing managers rely on internal reports of orders, sales, prices,
costs, inventory levels, receivables, payables, and so on. By analyzing this information they can spot important
opportunities and problems". Most marketing information systems rely heavily on internal records and data
(Farese et al, 2003). According to Armstrong and Kotler (2005), Firms around the globe build extensive internal
databases, which are defined as "the electronic collections of information obtained from data sources within the
company". Armstrong and Kotler (2005), added that this information is useful for the marketing manager to
identify the marketing opportunities and problems, evaluate performance, and plan programs.
A. Purpose of Internal Records
Internal records are used by all the firms to store and retrieve the information needed for decision making. In
addition, there are other purposes for having a database inside the firm, some of those purposes are
(ba.cmu.ac.th):
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Customer Satisfaction
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Creative and effective marketing strategy
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o Integrated marketing strategy
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Realities of the organization
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o Strength and weaknesses
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Competitive advantage
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Marketing control
B. Internal Data Elements
The data inside the company can be gathered from many different sources. All the transactions and customers
are part of this data. The data can be gathered from (Bunchua, 2011):
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Accounting data
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o Sales : planned vs. actual
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o Costs and expenses
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o Profits and returns
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Marketing data
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o Target market(s)
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o Marketing mix
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o Marketing activities
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Employee data
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o Salespersons
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o Customer service representatives
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o Other marketing staff
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Stakeholder data
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o Suppliers (current and ex-)
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o Intermediaries ( current and ex-)
C. The order to payment cycle
The order to payment cycle is considered as the heart of the internal record system (Kotler, 2012). The firm
receives orders from sales representatives, dealers, and customers. Those orders have to be managed as quick
and accurate as possible. Many firms use the Internet and extranets to improve the speed accuracy and
efficiency of the order to payment cycle (Kotler, 2012). The sales department prepares invoices, while the
accounting department keeps records of sales, costs and cash flows, manufacturing reports on production
schedules, shipments and inventories. The customer service department keeps records of consumer satisfaction
or service problems. Moreover, the shipped items generate shipping and billing documents those have to be
transmitted to various departments.
D. Database Marketing
The companies organize their information into customer, product and salesperson databases, and then
combine their data (Kotler, 2012). The decision makers in the firms should receive these data in a timely
fashion in-order to make better decisions. The analysts can mine the data to get information about neglected
customer segments, recent customers, and other useful information. The new technology made easier for the
firms to keep track of millions of customers, and millions of transactions easily and more efficient (Farese et al.,
2003). A marketing database, therefore, can be described as a collection of data, such as customers' names,
addresses and purchases, which provides marketers with information that enables them to make better decisions
in working toward accomplishing the companys objectives (Schoenbachler et al., 1997).
Benefits of database marketing
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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3. Marketing Intelligence
As they manage their businesses and compete in a global market, decision makers face many questions every
day. Is the business healthy? Who are my best customers? What supplier should I choose? Where are we
quarter-to-date? Do we deliver products consistently on time? Do we have the right mix of people? Effectively
managing the performance of the business means knowing what questions to ask and having the facts readily at
hand to answer them. This is what business intelligence (BI) delivers. BI, at its core, is the ability to access data
from multiple sources within an enterprise and deliver it to business users for analysis.
Business intelligence tools and systems play a key role in the strategic planning process of a firm. These
systems allow the firm to gather, store, access, and analyze corporate data to aid in decision making (Aakar et
al. , 2009).
A Business Intelligence
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Accounting Intelligence
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Marketing Intelligence
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Management Intelligence
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Financial Intelligence
Marketing Intelligence Definitions
Marketing intelligence (MI) is the everyday information relevant to a companys markets, gathered and
analyzed specifically for the purpose of accurate and confident decision-making in determining market
opportunity, market penetration strategy, and market development metrics. Marketing intelligence is necessary
when entering a foreign market. Competitive intelligence provides knowledge of competitors, their marketing
strategies, objectives, research activity, their strengths and weaknesses and other information. (Nasri, 2011).
Components of Marketing Intelligence
According to Kotler and Keller (2012), marketing managers collect marketing intelligence using too many
different ways. They can collect intelligence by reading books, newspapers, and trade publications. In addition,
the managers might talk to customers, distributers and suppliers to collect intelligence. Some managers go even
further to collect the intelligence; they meet with other companies managers.
Need for Marketing Intelligence
Marketing research plays a critical part in a marketing intelligence system. It aids in improving management
decision making by providing relevant, accurate, and timely information. The fundamental purpose of
marketing intelligence is to help marketing managers make decisions they face each day in their various areas
of responsibility, including pricing ( Kumar, 2009).
Tan and Ahmed (1999) mentioned that according to Caudron (1994, p. 39), market intelligence serves four
primary purposes.
These are:
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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The need for marketing intelligence will increase over the years, because all the firm are in a great need of all
kind of information that will help in maintaining a good position among the competitors. Global marketing is
playing a major role in the big size businesses around the world, which will make the demand for the
intelligence even more.
4 Market Research
Albaum and Duerr (2008), defined Marketing research as" the systematic and objective search for, and analysis
of, information relevant to the identification and solution of any problem relevant to the firm's marketing
activity and marketing decision makers". Marketing research is a process of gathering information needed for a
given situation regarding the firm (Pride and Ferrell, 1987). Marketing research is designing, collecting, and
reporting of data and findings regarding a specific marketing situation facing the company (kotler and Keller,
2009). "Marketing research is the systematic gathering, recording, and analyzing of data about problems
relating to the marketing of goods and services"(Cox, 1979). Kotler and Armstrong (1991) defined marketing
research as the function that links the consumer, customer, and public to the marketer through informationinformation used to identify and define marketing opportunities and problems; to generate, refine, and evaluate
marketing actions; to monitor marketing performance; and to improve understanding of the marketing
process.
Looking at all the definitions above, they all conclude that marketing research is a systematic way of gathering
and analyzing the information needed by the managers for a given situation in order to help in the decision
making process.
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DSS assist in solving a semi-structured problem and improved the performance of the
decision maker.
The ability to look forward, rather than simply assessing the past. Historical data can be used
as a basis for problem solving, and frequently is, but future influences and occurrences must be
taken into account.
The MDSS is without doubt a tool that increases the effectiveness of decision making within the
marketing environment.
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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2. Applications Software. These are the programs that marketing decision makers use to collect, analyze, and
manage data for the purpose of developing the information necessary for marketing decisions. Examples
include the marketing decisions support software (MDSS) and customer management software for on-line sales
and customer service.
3. Marketing Databases. A marketing database is a system in which marketing data files are organized d stored.
Data may be collected from internal and external sources. Internal sources largely result from transactions. They
provide data from e-commerce sites, sales results, shipping data, inventories, and product profitability. External
sources include market research, competitor intelligence, credit bureaus, and financial institutions. Data can be
organized in a flat file (Text file with one data record per line) or a relational database (Data is stored in tabular
form where each row represents one entity and each column represents one characteristic of that entity). For
instance, each row could represent a customer with the columns providing name, identification number, and
purchase information.
4. System Support. This component consists of system managers who manage and maintain the systems assets
including software and hardware network, monitor its activities and ensure compliance with organizational
policies. This function may also include a help desk for system users.
A.
The MDSS can provide analytical models for forecasting, simulation, and optimization. MDSS tools include
simple spreadsheets such as Excel, statistical analysis packages such as SPSS and SAS, on-line analytical
processing (OLAP) tools, data mining applications, and neural networks. The MDSS provides the user with the
ability to explore multiple options. Typical MDSS functions include models and tools for:
1. Sensitivity analysis. Decision-makers can explore changes in a strategic variable such as price and model its
impact on demand or competitive behavior.
2. What-if analysis. Can be easily accomplished with a spreadsheet. Revenues and costs can be manipulated to
show the impact of each variable on profits and cash flows.
3. Goal setting. Analysis focuses on the desired result and builds the resource base necessary to accomplish the
goal.
4. Exception reporting. Analysis looks for results that exceed or fall short of stated goals or benchmarks. Which
products or segments exceeded sales forecasts? Sometimes called gap analysis.
5. Pareto analysis. Analysis looks for activities that generate disproportionate results. For instance, the top 20
percent of customers may account for 80 percent of sales revenues.
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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B.
MDSS Analyses
Marketers typically use MDSS models and tools to analyze markets, customers, competitors, and internal
operations. The following list presents some of the most common types of issues targeted by MDSS analyses.
1. Market segment analysis. Use of modeling techniques to identify segments and analyze economic trends,
demographics and behavior.
2. Market share analysis. Analyze trends and determinants of market share.
3. Competitor analysis. Analysis of competitors market positions, economics customer base, and marketing
strategies.
4. Pricing analysis. Identifies and analyzes the factors that influence a firms ability to set prices including price
elasticity and demand analysis. Includes internal economics and market related factors.
5. Cost analysis. Studies a firms overall cost structure and its impact on product cost. Margin analysis
combines cost analysis with pricing analysis. Variance analysis looks for explanations of costs overages and
underages.
6. Sales analysis. Studies the distribution of a firms sales by region, product, brand, sales territory, etc.
7. Sales forecasting. Develops estimates of sales potential by product, region, sales territory, brand, etc.
8. Sales force productivity. Studies sales force effectiveness and efficiency and contributing factors.
9. Advertising analysis. Analyzes advertising effectiveness, media choices and brand awareness.
10. Distribution. Analyzes channel decisions from economic and strategic perspectives.
11. Simulation. Simulates decision making under various strategic scenarios.
12. Customer satisfaction. Analyzes issues concerning the customers expectations and outcomes with the
product.
C.
Data Warehousing
IBM defines a data warehouse as a place that stores enterprise data designed to facilitate management decisions.
In essence, a data warehouse provides the basis for an analytical system where periodic data points are collected
and stored at specified times for future analysis. Data warehousing enables marketers to capture, organize, and
store potentially useful data about customers and markets for decision-making purposes.
Every record of a transaction or interaction with a customer, supplier, channel member, or sales person is an
opportunity to create knowledge. Firms collect data from these day-today business operations. In order for this
data to be useful, it is often organized and stored in a data warehouse. Simply put, a marketing data warehouse
is a repository for data that has been collected from internal and external data sources. Each customer generates
a stream of transaction records over time. Data sources may include scanner data, billing records, applications,
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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D. Data Marts
A data mart is a scaled-down version of a data warehouse. It is more focused, less complex, and holds a subset
of the entire data, often in summary form. It is usually designed for a smaller number of users. They provide
fast, specialized access and applications. They are sometimes call departmental data warehouses.
Data marts are useful when it is not feasible for a data warehouse to meets the needs of all potential users. Data
marts enable a more limited number of users to exert greater control over the data they need. Data marts enable
increased data access speed and minimize preemption of user queries. They also minimize performance
sacrifices inherent in large data warehouses by enabling small groups to get the data they most need when they
need it. They may also include specialized data sets that can be analyzed with statistical or data mining tools.
Not all the data in the data mart need come from the data warehouse.
A marketing researcher may overlay customer purchase histories from the data warehouse with Geographic
information system (GIS) data from a commercial service and store it in the data mart.
E. Data Mining
Internet-based marketing strategies generate extremely large data sets from customer interactions. Purchase
histories, financial records, customer service records, and web site usage are just some of the data that reside in
customer databases. In order to transform this mountain of diverse data into operationally useful information,
marketers are increasingly using data mining procedures. Data mining is the computer-based exploration and
analysis of large quantities of data in order to discover meaningful patterns and rules for the purpose of
improving marketing, sales, and customer support operations. The combination of data mining procedures with
data warehousing enables the MDSS to move beyond just support for the operational processes in the marketing
organization and to focus on actual customer behavior. Data mining and data warehousing provide the means
and the infrastructure for extracting strategic opportunity from knowledge of the customer.
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OLAP is a family of analysis and report generating tools that are used to access large databases. It enables
partially aggregated data or full reports to be stored in a multidimensional format for fast, convenient access and
analysis.
OLAP methods are based on databases that allow multidimensional views of business data. OLAP is useful for
visualization of relationships between pre-designated variables. OLAP applications are used achieve a higher
view of the data such as total sales or profitability by product line, sales territory, or market segment.
The OLAP database is usually updated in batch mode from multiple sources. OLAP is optimized for analysis
and reporting. In contrast, users of on-line transaction processing (OLTP) applications are involved with
creating, updating, or retrieving individual customer records. OLTP databases are optimized for updating
transactions. An OLAP system essentially stores answers to predefined business questions for report generation
needs. The user can choose from a predetermined set of options for types of data and display formats. Output is
typically in the form of charts, graphs, tables or maps. OLAP solves the problem of distributing information to
large numbers of users with diverse reporting needs.
OLAP relieves the long response times that can be encountered when many users need to repeatedly query large
databases for extended periods of time.
Time series data are probably the most common dimensionality in an OLAP database. Marketers want to look at
trends in all aspects of the businesssales trends, market trends, pricing trends, profitability trends, etc. OLAP
can compare current results with prior periods, calculate year-to-date results, and present other comparative
historical data. OLAP can also present multiple hierarchies and classes within given dimensions. For instance,
data may be drilled down by state-county-city-customer or sales region-sales district-sales person
customer.
OLAP may be used in conjunction with data mining, but it is not a substitute. OLAP tools are powerful and fast
tools for generating reports on data, whereas data mining tools find patterns in the data. OLAP users are
constrained in the questions they can ask since OLAP and only answer the questions that the data formats were
designed to address. They cannot go back to the original data and search for new solutions. Therefore, data
mining is more powerful than OLAP.
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Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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2. Ask permission. Web users should be able to opt in, especially if the data to be collected is sensitive.
Sensitive data include medical information, financial information, insurance claims, and consumer behavior that
can be traced to the individual by name. Opt-In means the site cannot collect personal information unless the
user gives permission. Opt-Out is a default situation where the site collects personal data and is free to use or
sell it unless the consumer specifically denies permission
3. Allow access. Consumers should be allowed access to the personal data each site has collected on them in a
manner similar to the access they have to their credit report. Perhaps this can be accomplished by enabling
consumers to obtain the aggregated profiles the advertising network firms have constructed. Consumers should
be allowed to correct or delete inaccurate data.
4. Establish industry-wide privacy rules. The On-line Privacy Alliance is an association of leading global
companies and trade associations dedicated to the protection of privacy on-line. They are working to educate
on-line businesses on the need for a standardized privacy policy to inform customers about what information is
being collected, how it is used, how it is protected, and how people can access the information to prevent errors
and how to opt-out.
Prepared by- Md. Shamim Hossain, Assistant Professor, Department of Marketing, HSTU, Dinajpur, Bangladesh.
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