Record Keeping and Basic Concepts

Different Types of Business Entities

• Commercial Organizations (Profit Oriented)
  
  • Sole proprietor
  • Partnership
  • Limited companies
• Non-Commercial Organizations (Non-Profit Oriented)
• NGO’s (Non-government Organizations)
• Trusts o Societies

The Basic Concept of Record Keeping
We can maintain a diary of transactions and note the daily transactions like sale, purchase etc. in it. Problems Faced in Maintaining Diary of Transactions

• How will we come to know the income and expenses from various sources?
• We only have a sheet / page on which daily transactions are listed.
• We do not know which product is selling better and which is not.

Diary of Transactions

Transactions of Jan 20--
P a r t i c u l a r s	Rs.
Sold 5 nos. of Item A	1,000
Purchased 10 nos. of Item B	(15,000)
Sold 1 no. of Item C	2,000
Electricity bill paid	(1,500)
Sold 1 no. of Item A	500
Sold 2 nos. of Item B	4,000
Sold 5 nos. of Item A	1,000
Purchased 10 nos. of Item B	(15,000)
Sold 1 no. of Item C	2,000
Telephone bill paid	(1,000)
Salary paid	(1,500)

Available Alternate
One can go through all the transactions at the end of the month and note different types of transactions on different pages. So that every page gives complete detail for a different type of transaction like sales of different products and expenses of different types

Basic Concepts of Accounting

	What is Financial Accounting?
	It is the maintenance of daily record of All financial transactions in such a manner that it would help in the preparation of suitable information regarding the financial affairs of a business or an individual.
	Why is Financial Accounting needed?
	The need for recording financial transactions arises because the individual or business wants to know the performance of the business and to assist the person in making decisions related to the business.
	What are Transactions?
	In accounting or business terms, any dealing between two persons involving money or a valuable thing is called transaction. Human beings are social animals and are bound to adopt a community living style. Living in a community, essentially means that people interact with other people and are dependant on each other to fulfil their needs. Every person cannot fulfil all his needs like food, clothing, housing etc. on his own. He, therefore, depends on other people for his needs, in return to this providing others with some of theirs. It means that one will fulfil his needs from others and will provide others the things of their need in return. Every instance where one ‘gives something’ to ‘get something’ is called a transaction.

Pricing Decisions

The pricing decision is a critical one for most marketers, yet the amount of attention given to this key area is often much less than is given to other marketing decisions. One reason for the lack of attention is that many believe price setting is a mechanical process requiring the marketer to utilize financial tools, such as spreadsheets, to build their case for setting price levels. While financial tools are widely used to assist in setting price, marketers must consider many other factors when arriving at the price for which their product will sell.

Customer: In a situation where the product has many substitutes, customers decide the price. That is, the demand of customers are the paramount importance in setting the price of the product. In such a situation, the firm should try to deliver the value, in the form of product and/or service, at the target cost so that a reasonable profit can be earned. Similarly, under competitive condition, price is determined by market forces and an individual firm or an individual customer can not influence the price.

Competitors: When there are only few players in the market, competitors usually, react to the price changes and, therefore, pricing decisions are influenced by the possible reaction of competitors. As such management must keep watchful eye on the firm's competitors. That is, knowledge of competitors' strategy is essential for pricing decision in an oligopoly situation.

Product Planning and Development

Most people are unaware of the work and planning that goes into creating a new product. They only see the finished products in stores or showrooms as they make their purchase selections. In reality, most companies take six crucial steps during the new product planning process. They must ensure that their products meet the needs of consumers. There are also product quality and service issues to consider.

Developing a new product shouldn’t feel like you’re fighting in the dark. There’s an easier way. What you need is a structured road-map that gives your business a clear path to follow.

Actually developing the tangible product or service is only a small part of the new product development process, which includes the complete journey from generating the initial idea to bringing the product to market.

By setting out the steps involved, and sticking to them, your product development will become a more focused and flexible approach that can be adapted for all different types of products and services.

#1.   Idea Generation

Marketing Information System

A marketing information system (MIS) is a set of procedures and methods designed to generate, analyze, disseminate, and store anticipated marketing decision information on a regular, continuous basis. An information system can be used operationally, managerially, and strategically for several aspects of marketing.

A marketing information system can be used operationally, managerially, and strategically for several aspects of marketing.

We all know that no marketing activity can be carried out in isolation, know when we say it doesn’t work in isolation that means there are various forces could be external or internal, controllable or uncontrollable which are working on it. Thus to know which forces are acting on it and its impact the marketer needs to gathering the data through its own resources which in terms of marketing we can say he is trying to gather the market information or form a marketing information system.

This collection of information is a continuous process that gathers data from a variety of sources synthesizes it and sends it to those responsible for meeting the market places needs. The effectiveness of marketing decision is proved if it has a strong information system offering the firm a Competitive advantage. Marketing Information should not be approached in an infrequent manner. If research is done this way, a firm could face these risks:

Glossary of Marketing Terms

Aided recall. Respondents are asked if they remember a commercial for the brand being tested.

Alternative hypothesis. A competing hypothesis to the null.

Attitude. A learned predisposition to respond in a consistently favourable or unfavourable manner with respect to a given object.

Audit. A formal examination and verification of either how much of a product has sold at the store level (retail audit) or how much of a product has been withdrawn from warehouses and delivered to retailers (warehouse withdrawal audits).

Balanced scale. Scale using an equal number of favourable and unfavourable categories.

Banner. The variables that span the columns of the cross-tab; generally represents the subgroups being used in the analysis.

Before-after design. Experiment where a measurement is taken from respondents before they receive the experimental treatment condition; the experimental treatment is then introduced, and the post-treatment measurement is taken.

Before-after with control design. Experiment that adds a control group to the basic before-after design; the control group is never exposed to the experimental treatment.

Between-group variations. Between-group differences in scores for groups that were exposed to different treatments - represents "explained" variation.

Blind testing. Tests where the brand name of the product is not disclosed during test.

Core Concept of Marketing

Many people confuse the word marketing with selling and advertising. The reason is that there is widespread advertisement now days in the form of newspaper ads, TV commercials, direct-mail campaigns, sales calls etc. But actually marketing and advertising are only two of many other important marketing functions such as satisfying customer needs, creating long term customer relationship, finding new customers etc. The basic difference between marketing and advertising is that the advertisement starts after the product is produced whereas marketing starts with a well-defined market, focuses on customer needs and establishes long term customer relation to earn profit.

Short Question & Answers

Question:	What is the difference between mass marketing and database marketing?
Answer:	In the data base marketing we have all the relevant information of the our target market and we have made the records of the relevant information in the form of the data bases. Mass marketing means the marketing at the large scale marketing in which we do not have the data base form of record of our customer because our target market is very large and the products are produced by the general common character.
Question:	What is the role of broker and agent in the marketing system?
Answer:	Main function is to facilitate buying and selling, for which they earn a commission on the selling price. Generally, specialize by product line or customer types. BROKERS: Chief function is bringing buyers and sellers together and assisting in negotiation. They are paid by the party who hired them, and do not carry inventory, get involved in financing, or assume risk. Examples: food brokers, real estate brokers, insurance brokers, and security brokers. AGENTS: Represent either buyers or sellers on a more permanent basis than brokers do.
Question:	What is mean by Competitive Advantage? How we will design a Competitive Intelligence System?

Pricing Strategies

One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion. 

While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product: 

1. Develop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning. 
2. Make marketing mix decisions - define the product, distribution, and promotional tactics. 
3. Estimate the demand curve - understand how quantity demanded varies with price. 
4. Calculate cost - include fixed and variable costs associated with the product. 
5. Understand environmental factors - evaluate likely competitor actions, understand legal constraints etc. 
6. Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization (status quo). 
7. Determine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and defined discounts. 

Brand Equity

Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.

What is Brand Equity? 
Brand equity is an intangible asset that depends on association made by the consumer. There are at least three perspectives from which to view brand equity: 

The Marketing Mix

Marketing is simplistically defined as ‘putting the right product in the right place, at the right price, at the right time.’ Though this sounds like an easy enough proposition, a lot of hard work and research needs to go into setting this simple definition up. And if even one element is off the mark, a promising product or service can fail completely and end up costing the company substantially.

The use of a marketing mix is an excellent way to help ensure that ‘putting the right product in the right place,…’ will happen. The marketing mix is a crucial tool to help understand what the product or service can offer and how to plan for a successful product offering. The marketing mix is most commonly executed through the 4 P’s of marketing: Price, Product, Promotion, and Place.

These have been extensively added to and expanded through additional P’s and even a 4C concept. But the 4Ps serve as a great place to start planning for the product or even to evaluate an existing product offering.

The Four P’s

Product Life Cycle

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

Decline.
At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Target Market Selection

The selection of target markets is the second major phase of the STP process, as shown in the diagram below. (Where STP stands for segmentation, targeting and positioning.)

As shown, firms initially segment the market and, as part of this process, construct segment profiles for each segment. Included in a segment profile is a detailed description of the segment, along with various size and profit measures. Using this information in conjunction with the firm’s strategy, resources and goals organization appropriate target markets can then be selected.

The selection of a target market is a very important decision for a firm as it then requires significant effort and commitment to implement an appropriate and targeted marketing mix. Target market selection is a key part of marketing strategy and typically involves significant analysis, discussion and review throughout the firm.

Market Analysis

A marketing analysis is a study of the dynamism of the market. It is the attractiveness of a special market in a specific industry.  Marketing analysis is basically a business plan that presents information regarding the market in which you are operating in. It deals with various factors.

What is the use?
A marketing analysis is done so that you can formulate a strategy on how to run your business. By taking into consideration certain factors, you will know how to operate your business.

What are the factors?
The most common factors are the SWOT which is an acronym for; Strengths, Weaknesses, Opportunities, and Threats. By assessing the company’s strengths and weaknesses, you can make a strategy on which factors to focus upon. If you have a good labor force, ample investment and good advertising experts then you are going to make your marketing strategy focusing on those things. Similarly if your technology is comparatively poorer and you lack online presence then you are going to avoid those things. You also look at external factors like situations which may provide you with an opportunity or threat.  Economic factors, political instabilities or even social changes can give you opportunities which you can seize and do better. They can also create threats which are going to hamper your business dealings. Considering all these factors will give you a marketing analysis from which you can implement your decisions.

Market Segmentation

Market segmentation is the first step in defining and selecting a target market to pursue. Basically, market segmentation is the process of splitting an overall market into two or more groups of consumers. Each group (or market segment) should be similar in terms of certain characteristics or product needs.

The concept of market segmentation was first identified by Smith back in the 1950s. He was one of the first to recognize the importance of market segmentation, as shown in the following quote:

“Market segmentation is based upon developments on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to consumer or user requirements.” (Smith, 1956)

To clarify this statement in simple language, he basically saw market segmentation being an important tool to enable marketers to better meet customer needs. Since that time, market segmentation has become a widely accepted and used marketing approach. Here are some more recent definitions of what is market segmentation:

“Market segmentation is the process of splitting customers, or potential customers, in a market into different groups, or segments, within which customers share a similar level of interest in the same, or comparable, set of needs satisfied by a distinct marketing proposition” (McDonald & Dunbar, 2004)

“Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a market action.” (Kerin, 2011)