Introduction; The term “Materials” refers to the raw materials used for production, subassemblies and fabricated parts. Also, define as “anything that can store stock or stockpiled”. The terms “materials” and “stores” are sometimes used interchangeably. However, both terms differ. The term “stores” has a wider meaning and includes not only the raw materials used in production but also other items held in stock in the storeroom, such as components, tools, patterns, maintenance material, consumable stores, etc.
Here are explain; What does Materials? Introduction, Meaning, Control and Objectives.
It also includes stock of finished goods and partly finished goods. “Consumable” stores are items used in, production but do not become a part of the finished product, such as oil, grease, sandpaper, soap, and other cleaning materials, etc. Material is a chemical substance or mixture of substances that constitute an object. The material can be pure or impure, living or non-living matter. They can classify based on their physical and chemical properties, or their geological origin or biological function.
Materials science is the study of materials and their applications. Raw material can process in different ways to influence their properties, by purification, shaping or the introduction of other materials. New material can produce from raw material by synthesis.
Dressmaker making the dress by Materials. #Pixabay.
Meaning of Materials:
The term “Material” refers to the raw material used for production, subassemblies and fabricated parts. Material control is the main component of the process of material management. Control over material is of utmost importance for the smooth and uninterrupted functioning of an organization.
A few definitions of the term is given as under:
“Material control is a systematic control over purchasing, storing and consumption of materials, to maintain a regular and timely supply of materials, at the same time, avoiding overstocking.”
Another definition;
“Material control refers to the management function concerned with the acquisition, storage, handling and use of materials to minimize wastage and losses, derive maximum economy and establish responsibility for various operations through physical checks, record keeping, accounting, and other devices.”
In simple words, material control refers to the various measures adopted to reduce the amount of loss of material at the time of receiving, storing and issuing the raw material. Material control in practice is exercised through periodical records and reports relating to purchase, receipt, inspection, storage and issuing direct and indirect material. Proper control over material can contribute substantially to the efficiency of a business.
What does Materials? Introduction, Meaning, Control and Objectives. Wool Materials #Pixabay.
Concept and Objectives of Materials Control:
Material form an important part of the cost of a product and, therefore, proper control over material is necessary. No cost accounting system can become effective without proper and efficient control of the material. As well as, Materials control aims at efficient purchasing of material, efficient storing and efficient use or consumption.
Material or inventory control may define as,
“Systematic control and regulation of the purchase, storage and usage of materials in such a way that maintains a smooth flow of production and at the same time avoids excessive investments in inventories. Efficient material control cuts out losses and wastes of materials that otherwise pass unnoticed”.
The broad objectives of material control are below:
It eliminates the problem of understocking and, therefore, the material of the desired quality will available when the need for efficient and interrupt production.
The material will purchase only when the need exists. Hence, it avoids the chances of over-stocking.
By purchasing material at the most favorable prices, the purchase can make a valuable contribution to the reduction in cost.
Material is protecting against loss by fire, theft; handling with the help of proper physical controls.
Issues of material are properly authorizing and accounting for.
Vouchers will approve for payment only if the material has been receiving and is available for the issue.
Material is, at all times, charge as the responsibility of some individual.
Knitting product makes by Dressmaker. #Pixabay.
Objectives of Materials Control:
The following are the main objectives of materials control:
To the availability of Materials:
There should be a continuous availability of all types of materials in the factory so that the production may not be held up for want of any material. Also, the minimum quantity of each material is fixing to permit production to move on schedule.
To reasonable Price:
While purchasing materials, it is seen that it is purchasing at a reasonably low price. Quality is not to sacrifice at the cost of the lower price. The material purchase should be of that quality alone which is a need.
To enable uninterrupted production:
The main object of material control is to ensure smooth and unrestricted production. Production stoppages and production delays cause substantial loss to a concern.
To ensure the requisite quality of materials:
The quality of finished products depends mainly on the quality of the raw material used. If the quality of the raw material is not up to desired standards, the end product will not be of the quality of the desires which affects the sale of the product in the market resulting in loss of profits as well as the goodwill of the concern. It is of vital importance to exercise strict control and supervision over the purchases, storage, and handling of material.
To minimize wastage:
The loss of material may occur on account of rust, dust, dirt or moisture, bad and careless handling of material, poor packing and many other reasons. The causes responsible for such losses must be brought to light and utmost efforts should make to minimize the wastage of raw material. This is possible only by introducing an efficient materials control system. There should be minimum possible wastage of materials while these are being stored in the go-downs by storekeepers or used in the factory by the workers.
Wastage should allow up to a certain level known as the normal level of wastage and it should not exceed that level. Leakage or theft of material must avoid keeping the cost of production under control. Storekeepers and workers should train to handle the material in a scientific way to avoid wastage. Also, the storekeeper is to keep the stores neat and tidy to avoid the wastage due to rust, dust or dirt.
To fix responsibility:
A proper system of materials control also aims at fixing the responsibility of operating units; and, also individuals connected with the purchase, storage, and handling of material.
To provide information:
Another objective of materials control is to provide accurate information regarding material cost; and, inventory whenever needed by management.
Monopolistic Competition; Know the Characteristics of Monopolistic Competition, before knowing their definition – Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another and hence are not perfect substitutes. “It has been more fully realized that every case of exchange is a case of what may be called partial monopoly and partial monopoly is looked at from the other said a case of imperfect competition. There is a blending of both competition element and monopoly element in each situation.” by According to Prof. J. K. Mehta.
Know and Understand the Characteristics of Monopolistic Competition.
Concept of Monopolistic Competition: Monopolistic competition is a market structure which combines elements of monopoly and competitive markets. Essentially a monopolistic competitive market is one with freedom of entry and exit, but firms can differentiate their products. Therefore, they have an inelastic demand curve and so they can set prices.
However, because there is freedom of entry, supernormal profits will encourage more firms to enter the market leading to normal profits in the long term. Monopolistic Competition refers to the market situation in which there is a keen competition, but neither perfect nor pure, among a group of a large number of small producers or suppliers having some degree of monopoly because of the differentiation of their products.
Thus, we can say that monopolistic competition (or imperfect competition) is a mixture of competition and a certain degree of monopoly, on the basis of a correct appraisal of the market situation. Chamberlin has asserted that monopoly and competition are not mutually exclusive rather both are frequently blended together. In short, we can say that a market with a blending of Monopoly (What do you think of Monopoly?) and competition is called monopolistic competition or imperfect competition.
Characteristics of Monopolistic Competition:
Important characteristics of monopolistic competition are as follows:
Minimum Number of Buyers and Sellers:
In this market, neither buyers nor sellers are too many as under perfect competition nor there is only one seller as under monopoly. Mostly, it is a situation in between. Every producer for his produced commodity has some special buyers. Every consumer and seller can influence demand and supply in the market.
Maximum Number of Buyers and Sellers:
There are a large number of firms but not as large as under perfect competition. That means each firm can control its price-output policy to some extent. It is assumed that any price-output policy of a firm will not get a reaction from other firms that means each firm follows the independent price policy. If a firm reduces its price, the gains in sales will be slightly spread over many of its rivals so that the extent to which each of the rival firms suffers will be very small. Thus these rival firms will have no reason to react.
Ignorance of the Buyers:
There are some people who think that high priced goods will be better and of higher quality. So, they avoid buying low priced goods.
The difference in the Quality and Shape of the Goods:
Although the commodities produced by different producers can serve as perfect substitutes to those produced by others, yet they are different in color, form, packing, design, name, etc. So there is product differentiation in the market.
Differentiated Products:
Sellers sell differentiated products, but they are close— but not perfect—substitutes. Buyers may not mind if they do not get Lux soap rather than Rexona. Different varieties of soap that are available in the Indian market are slightly differentiated products and, hence, close substitutes. It is the degree of differentiation that creates both monopoly and competitive elements. Every product is unique to the buyers. So every seller enjoys some degree of monopoly of his own product over other sellers. But since these goods are close substitutes, sellers face competition.
Because of the brand loyalty of buyers, sellers exercise some monopoly power. And sales of closely related goods create a competitive environment. Thus monopolists compete among themselves. It is product differentiation that enables Monopolistically competitive firms to possess market power with competition amongst the firms. In this market, monopoly power is, therefore, small.
Product Differentiation:
Another feature of the monopolistic competition is product differentiation. Product differentiation refers to a situation when the buyers of the product differentiate the product with others. Basically, the products of different firms are not altogether different; they are slightly different from others. Although each firm producing differentiated product has the monopoly of its own product, yet he has to face the competition. This product differentiation may be real or imaginary. Real differences are like design, the material used, skill, etc. whereas imaginary differences are through advertising, trademark and so on.
Lack of Knowledge on the Part of Consumers:
Neither consumers nor sellers have full knowledge of market conditions, so there is an international difference in the price of goods from those of others.
High Transportation Cost:
In this high transportation cost play an important role in order to create discrimination among commodities. Similar goods because of different transport costs are bought and sold at different prices.
Advertisement:
Here, advertisement plays an important role because buyers are influenced to prefer by advertisement, which plays upon their mind and makes them the product of one firm to those of another. Through advertisement, they are brought to his notice through radio, television and other audio-visual aids in a more pleasing and more forceful manner. Thus, rival firms compete against each other in quantity, in facilities as well as in price.
Differences in the Establishment of Industry:
In the imperfectly competitive market, there is neither freedom of entry or exit as is under perfect competition nor there is perfect control as in monopoly but there are some restrictions on the entry of industry only.
Elastic Demand Curve:
Since the product of each seller is slightly different from his rivals he enjoys some degree of monopoly power and, hence, can raise the price of his product without losing most customers. But as other rival firms produce closely related goods, every firm faces competition and its influence over the price of the product is rather limited.
Thus, each firm has a downward sloping demand curve implying that it behaves as a price-maker. Since a seller faces a large number of competitors to whom buyers may turn, the demand curve is more elastic.
Non-Price Competition:
Besides price competition, Chamberlin suggested cases of non-price competition that arise due to product variation and selling activities. Seller always tries to establish the fact that his product is superior to others by improving the quality of his product. And in doing so, he incurs selling costs or makes advertisement to attract more customers in his fold.
It is the product differentiation that causes selling costs to emerge, in addition to production costs. In Chamberlin’s model, demand for any commodity is not only affected by the price of a commodity but also by non-price competition (i.e., product variation and selling activities). Selling costs or advertising outlays are peculiar to this market.
Know the Characteristics of Monopolistic Competition And understand how to Determine the Price and output in their Competition. #Pixabay.
Now, Understand basically how to Determine the Price and output in their Competition?
You’ll understand the Characteristics of Monopolistic Competition upstairs, now study Determine the Price and output in their Competition. Under monopolistic competition, organizations need to make optimum adjustments in the prices and output sold to attain equilibrium. Apart from this, under monopolistic competition, organizations also need to pay attention to the design of the product and the way the product is promoted in the market.
Moreover, an organization under monopolistic competition is not only required to study its individual equilibrium but group equilibrium of all organizations existing in the market. Let us first understand the individual equilibrium of an organization under monopolistic competition. As we know every seller, irrespective of the market structure, is willing to maximize his/her profits. In monopolistic competition, profits are maximized at a point where marginal revenue is equal to marginal cost.
The price determined at this point is known as equilibrium price and the output produced at this point is called equilibrium output. If the marginal revenue of a seller is greater than marginal cost, he/she may plan to expand his/her output. On the other hand, if marginal revenue is lesser than marginal cost, it would be profitable for the seller to reduce his/her output to the level where marginal revenue is equal to marginal cost.
Equilibrium in Long-term Run:
In the preceding sections, we have discussed that in the short run, organizations can earn supernormal profits. However, in the long run, there is a gradual decrease in the profits of organizations. This is because, in the long run, several new organizations enter the market due to freedom of entry and exit under monopolistic competition. When these new organizations start production the supply would increase and the prices would fall. This would automatically increase the level of competition in the market.
Consequently, the AR curve shifts from right to left and supernormal profits are replaced with normal profits. In the long run, the AR curve is more elastic than that of in the short run. This is because of an increase in the number of substitute products in the long- run. The long-run equilibrium of Monopolistically competitive organizations is achieved when average revenue is equal to average cost. In such a case, organizations receive normal profits.
Equilibrium in Short-term Run:
The short-run equilibrium of a monopolistic competitive organization is the same as that of an organization under monopoly. In the short run, an organization under monopolistic competition attains its equilibrium where marginal revenue equals marginal cost and sets its price according to its demand curve. This implies that in the short run, profits are maximized when MR=MC.
What does Marketing Efficiency mean? Marketing efficiency is total revenue expressed as a percentage of total marketing costs including promotion, product development and sales expressed as a percentage of revenue. Learn and understand the four Key Indicators of Marketing Efficiency;A simple textbook definition says “Marketing efficiency is the maximization of input-output ratio.” We know that measuring the efficiency of marketing is as critical to the success of the modern marketer as is measuring the ROI of their marketing efforts. As well as, important thing; Marketing Research.
Learn the Concept and Indicators of Marketing Efficiency.
The strong form of marketing efficiency or market efficiency essentially proclaims that it is impossible to consistently outperform the market, particularly in the short term, because it is impossible to predict stock prices. If you’re not measuring your marketing efficiency, your marketing is going to suffer, but marketing efficiency is only the beginning what matters most is identifying the pieces of data that can make a difference in driving your marketing strategy.
This may be controversial, but by far the most controversial aspect of market efficiency is the claim that analysts and professional advisors add little or no value to portfolios, especially mutual fund managers (with the notable exception of those managing funds that take on greater risks), and that professionally managed portfolios do not consistently outperform randomly selected portfolios with equivalent risk characteristics.
Definition of Marketing Efficiency:
Fred Waugh remarked that,
“An unsophisticated student might make two false assumptions, first, that is it easy to define and to measure the efficiency of agricultural marketing and, second, that almost everyone is in favor of efficiency.”
Wells, confessing that he did not know precisely how to measure marketing efficiency, added: “And I doubt whether our so-called efficiency experts know how.”
As well as, Definition of Market Efficiency:
The elements of market efficiency can be stated as follows:
Competition and the number of market participants: Greater the number of buyers and sellers participating in the transactions or greater the competition, the market efficiency increases.
Transfer of ownership and the balance of market power: The party which has greater knowledge has the greater power over deciding the terms of sale i.e. the terms of transfer of ownership. In an efficient market, both parties are well equipped with information so that the balance of power is easily maintained.
The efficiency of price formation: Efficient pricing of products occurs when a large number of buyers and sellers take part in the transaction and possess the same information about the market.
The formula of Marketing Efficiency:
Marketing Efficiency = (Revenue / Marketing cost) x 100
For example, a firm with revenue of $2 billion dollars with total marketing costs of $250 million has the marketing efficiency of marketing efficiency = (2000/250) x 100 = 800%
Marketing efficiency should not be confused with a profit rate as this doesn’t include any non-marketing costs such as the unit costs of your products. However, it serves as a useful benchmark and metric for measuring improvement to your marketing results. Also, don’t forget about understand; What is Marketing Planning?
#Indicators of Marketing Efficiency:
Due to the non-availability of standard efficiency criteria, the following indicators are sometimes identified with marketing efficiency.
Marketing margins.
Consumer price.
Availability of physical marketing facilities, and.
Market competition.
Now, explain;
A. Market Margins:
In most cases, high marketing margins are regarded as prima facie evidence of gross inefficiency in marketing, and the middlemen who are blamed for being either inefficient, too numerous, or too monopolistic, are most often regarded as the major cause of high marketing margins. Whether high marketing margins, necessarily imply inefficiency in marketing must be analyzed in light of the following considerations.
Firstly, marketing margins will appear high in relation to Production costs of a commodity in any country or region in which those production costs are themselves quite low. The use of modern technology, which prodigiously lower costs of production, exhibits a magnifying effect on any given distributive margin.
Secondly, the extreme geographic specialization of production (especially in the developed countries) has resulted in a considerable increase in the cost of providing the ‘lace utility of farm goods. This, in turn, has served to increase transport costs and, therefore, marketing margins. But this may imply that opportunity costs of production are so low in areas far from the market that the low costs of production more than offset the high costs of marketing.
Thirdly, the increased amount of time utility embodied in food products (both perishable and non-perishable) has required extra storage and processing costs for their orderly marketing.
Fourthly, in all developed countries (and in a good number of developing countries, too) considerable changes have occurred with respect to farm utility of farm products. Consumers today are increasingly demanding that their food and agricultural non-food requirements be met in more and more finished form. This has tended to multiply marketing margins, especially in developed countries.
Finally, the high labor costs, especially in the retail trades, which are a special feature of the developed countries also contribute to high marketing. Self-Service shopping, which has gained considerable momentum in recent years, endeavors to minimize the impact of high labor costs, but it is not a magical device to reduce the overall costs to a significant extent. It merely eliminates the small fraction of the costs due to those retail services that come to be performed mainly by the consumer.
The major marketing costs are those which result due to enhanced improved utilities of form time and place. They represent the costs of the services which the consumer demands and for which he is willing to pay. In view of the above consideration, it could be safely concluded that distributive margins which form a longer and larger share of food expenditure have not been inconsistent with efficient marketing in the developed countries. In fact, these marketing margins have been a sine qua non for an effective marketing system in developed countries.
What follows from the above illustration is that the size and composition of marketing margins can be used as a useful measure of efficiency, but to use it effectively requires an extremely sensitive weighing balance. The size of margin cannot be related to anything else until it is accurately related to the quantum and type of services yielded by it. Let us analyze this aspect briefly.
Marketing margin consists of two elements:
Explicit costs paid for the performance of various marketing functions, and.
The profit of the market intermediaries.
Now, explain;
1. The Cost Component:
The costs in marketing are incurred in the performance of various marketing functions of assembling, transportation, storage, processing, etc. or in other words, in the creation of various utilities. In order to minimize costs, the marketing facilities should operate at the maximum possible capacities with the least possible losses of produce.
We can decide whether the costs prevailing in the marketing system have any economic justification only after we have analyzed the following factors:
The intensity of competition, especially in light of various state policies.
The extent of utilization of the capacity of marketing facilities.
The quantum and nature of services rendered in creating time, place and form utilities.
The quantum of production losses in distribution.
2. The Profit Component:
The subject of marketing profit has been rather extensively covered in the marketing literature of the developing countries. There are more abuses than appreciations attached to this subject. It is usually stated that the profit element predominates in the aggregate margin on agricultural commodities as a result of certain superfluous or inefficient intermediaries in the existing marketing channels.
Most of the studies relating to this topic do not, however, endeavor to quantify the cost of various direct and indirect services rendered by the intermediaries. Much of what is called profit, in fact, reflects middlemen costs.
For instance, studies of middlemen profit in the developing countries usually tend to ignore the following cost, items:
The cost on the money loaned out by the intermediary to farmers, consumers, or other intermediaries;
The cost of risks and uncertainties borne by the middleman in agricultural trade;
The cost of social help extended to the farmers;
The cost of entertainment at his business premises;
The cost due to spoilage of produce; and
The cost for bribes or gifts and for some kinds of levies, taxes and service charge not in fact related to the actual services provided.
In order to arrive at the real profit figures, the cost of these and other indirect services has to be quantified. In determining the economic justification of various intermediaries the following factors would be carefully analyzed:
The intensity of competition at all trade levels.
The number of risks and uncertainties involved.
The size of the business.
Alternative employment opportunities in society.
Restrictive state policies.
B. Consumer Prices:
Rising consumer prices are usually regarded as a measure of market inefficiency.
But the price of any commodity is a function of:
Consumer income.
Available supplies in relation to effective demand.
Money supply.
Prices of substitutes and complements.
Seasonal factors.
Marketing margins and distributional patterns.
State price policies, and.
General Price level.
Increase in consumer prices is commonly attributed to manipulation by middlemen artificially restricting the distribution of commodities to their own advantage or creating artificial scarcities in the distribution of commodities. Actually, most marketing costs are relatively sticky and tend to change very slightly as compared to price changes caused by other factors.
Even when deficiencies in the distributional patterns affect the price structure, they are usually caused by state price and procurement policies. High consumer prices are, therefore., largely due to factors other than marketing inefficiencies, although marketing often becomes the scapegoat for ills it has not directly caused.
C. Physical Marketing Facilities:
The inadequacy of physical marketing facilities like transport, storage, processing, etc. is also a subject of criticism in discussions of the efficiency of the marketing system. This has been common especially since the recent agricultural breakthrough in many of the developing countries. Although the availability of physical facilities has a direct bearing on marketing efficiency, to treat it as an important efficiency is questionable.
The paucity of physical facilities may exist because of subsistence farming, the seasonal nature of agricultural production, the structure and wide dispersion of farm producing units, low quantum of marketable surplus, the stage of economic development, and the huge overhead expenditure involved in the provision of such facilities in the developing countries. Where physical facilities do exist, they are seldom based on a reassessment of the economic potential and requirements of the area.
In the developing countries, the spatial distribution of physical marketing facilities is so unorganized that at certain places they are underutilized and at other over utilized. There is a need to determine the exact demands and patterns of distribution and the reallocation of existing facilities needed for their efficient use.
Learn and understand the four Key Indicators of Marketing Efficiency, #Pixabay.
D. Market Competition:
The intensity of competition has been widely suggested as a major indicator of market inefficiency. Though competition is desirable in itself, the methods of its measurement lack uniformity, precision, and objectivity. It is conventional for researchers to blame the policymaker in a developing country for any lack of competition.
On the other hand, where competition is intense the researcher who considers it the key to efficiency is hard to put to indicate areas of possible improvement or to define relative degrees of efficiency. Excessive focus on quality competition is likely to be found in a market that lacks progressiveness and growth orientation; excessive attention to private competition leads towards greater concentration among sellers and the development of monopolistic organization with all of its attendant evils.
Reliance on competition as a key indicator of efficiency is thus a static approach which disregards dynamic considerations, lacks a standard of comparison, and pays no attention to economic and social norms based on the value system of an economy. Use of competition as a measure of marketing efficiency would have to be selective and judicious to have any constructive influence on market performance.
Since market performance refers to the end results of market adjustment by buyers and sellers in the market, the intensity of market competition may be considered both as a performance norm and as the net outcome of a reorganization of the market structure and market conduct.
Thus the effective use of market competition as a measure of marketing efficiency would require an appropriate application of the criteria of workability for market structure, conduct and performance with all their interaction effects, so as to increase the intensity of competition to the extent socially desirable, while also moving towards such pre-designated social and economic goal.
What does Investment Banking mean?Investment banks are essentially financial intermediaries, who primarily help businesses and governments with raising capital, corporate mergers and acquisitions, and securities trade. Investment Banking: Introduction, Concept, and Types; It is a much wider term than merchant banking as it implies significant fund-based exposure to the capital market.
Does Investment Banking explain their concept of what they are?
Internationally, investment banking has progressed both in the fund based & fee-based segments of the industry. In India, the dependence is heavily on merchant banking, more particularly with issue management & underwriting. In the USA, such banks are the most important participants in the direct market by bringing financial claims for sale. They help interested parties in raising capital, whether debt or equity in the primary market to finance capital expenditure.
Once the securities sell, investment bankers make secondary markets for the securities as brokers and dealers. In 1990, there were 2500 investment banking firms in the USA doing underwriting business. About 100 firms are so large that they dominate the industry. In recent years some investment banking firms have diversified or merged with other financial institutions to become full-service financial firms.
Introduction to Investment Banking:
Banking and financial institution on the one hand and the capital market on the other are the two broad platforms of institutional that investment for capital flows in the economy. Therefore, it could be inferred that investment banks are those institutions that are counterparts of banks in the capital markets in the function of intermediation in the resource allocation.
Investment bankers have always enjoyed celebrity status, but at times, they have paid the price for excessive flamboyance as well. Investment banks help companies, governments, and their agencies to raise money by issuing and selling securities in the primary market. They assist public and private corporations in raising funds in the capital markets, as well as in providing strategic advisory services for mergers acquisitions and other types of financial transactions.
However downturn in the primary market has forced merchant banks to diversify & become full-fledged investment banks. Over the decades, backed by evolution & also fuelled by recent technological developments, investment banking has transformed repeatedly to suit the needs of the finance community & thus become one of the vibrant & exciting segments of financial services.
The future for investment banks is bright with scope for merchant banks to convert themselves into investment banks. Much of the investment banking in its present form, thus owes its origins to the financial market in U.S.A due to which, American investment banks have been the leader in the American & Euro market as well.
Therefore, the term “Investment banking” can say to be of American origin. Their counterparts in the U.K. were termed as “Merchant banks” since they had confined themselves to capital market intermediation until the U.K & European markets & extended the scope of such businesses.
Investment Banking in India:
For more than three decades, investment banking activity was mainly confined to merchant banking services. The foreign banks were the forerunners of merchant banking in India. The erstwhile Grindlays Bank began its merchant banking operations in 1967 after obtaining the required license from RBI. Soon after Citibank followed through. Both the banks focused on syndication of loans and raising of equity apart from other advisory services.
In 1972, the Banking Commission report asserted the need for merchant banking activities in India and recommended a separate structure for merchant banks different from commercial bank’s structure. The merchant banks were meant to manage investments and provide advisory services. The SBI set up its merchant banking division in 1972 and the other banks followed suit. ICICI was the first financial institution to set up its merchant banking division in 1973.
More Things;
The advent of SEBI in 1992 was a major boost to the merchant banking activities in India and the activities were further propelled by the subsequent introduction of free pricing of primary market equity issues in 1992. Post-1992, there were a lot of fluctuations in the issue market affecting the merchant banking industry. SEBI started regulating merchant banking activities in 1992 and a majority of the merchant banker registers with it. The number of merchant banker registers with SEBI began to dwindle after the mid-nineties due to the inactivity in the primary market.
Many of the merchant bankers into issue management or associate activity such as underwriting or advisory. Many merchant bankers succumbed to the downturn in the primary market because of the over-dependence on issue management activity in the initial years. Also, not all the merchant bankers were able to transform themselves into full-fledged investment banks. Currently, bigger industry players who are in investment banking are dominating the industry.
The Scenario for Investment Banking in India?
In India commercial banks restricted from buying and selling securities beyond five percent of their net incremental deposits of the previous year. They can subscribe to securities in the primary market and trade in shares and debentures in the secondary market.
Further, acceptance of deposits limits to commercial banks. Non-bank financial intermediaries accept deposits for a fixed term restricted to financing leasing/hire purchase, investment and loan activities and housing finance.
They cannot act as issue managers or merchant banks. Only merchant bankers registered with the Securities and Exchange Board of India (SEBI) can undertake issue management and underwriting, arrange mergers and offer portfolio services. Merchant banking in India is non-fund based except underwriting.
Structure of Investment Banking in India:
The Indian investment banking industry has a heterogeneous structure for the following reasons:
The regulations do not permit all investment banking functions to perform by a single entity for two reasons: 1) To prevent excessive exposure to business risk, and. 2) To prescribe and monitor capital adequacy and risk mitigation mechanisms.
Commercial banks prohibited from getting exposed to stock market investments and lending against stocks beyond certain specified limits under the provisions of the RBI and Banking Regulation Act.
Merchant banking activities can carry out only after obtaining a merchant-banking license from SEBI.
Merchant bankers are other than banks and financial institutions not authorized to carry out any business other than merchant banking.
The Equity research activity has to carry out independent of the merchant banking activity to avoid conflict of interest, and.
Stockbroking business has to be separated into a different company.
Regulatory Framework for Investment Banking in India:
An overview of the regulatory framework furnish below:
All investment banks incorporated under the Companies Act, 1956 governed by the provisions of that Act.
Those investment banks that incorporate under a separate statute regulate by their respective statute. Ex: SBI, IDBI.
Universal banks that function as investment banks regulate by RBI under the RBI Act, 1934.
All Non-banking Finance Companies that function as investment banks regulate by RBI under RBI Act, 1934.
SEBI governs the functional aspects of Investment banking under the Securities and Exchange Board of India Act, 1992.
Those investment banks that carry foreign direct investment either through joint ventures or as fully owned subsidiaries govern by the Foreign Exchange Management Act, 1999 concerning foreign investment.
Investment Banking: Introduction, Concept, and Types. #Pixabay.
Types of Players in Investment Banking:
The following Types of Players below are:
Full-Service Firms:
These are the type of investment banks that have a significant presence in all areas like underwriting, distribution, M&A, brokerage, structured instruments, asset management, etc. They are all rounder 0f the game.
Commercial Banks:
Commercial Banks operating through “Section 20” subsidiaries referring to the subsidiaries formed under section 20 of the Glass- Steagall Act which were allowed to carry on limited investment banking services.
Boutique Firms:
These are the type of players who specialize in particular areas of investment banking.
Brokerage Firms:
These firms offer only trading services to retail & institutional clients. They have a huge investor base which also use by underwriters to place issues.
Asset Management Firms:
These firms offer investment services. This includes activities like fund management, wealth management, cash management, portfolio management depending on the type of investors, Tenure of the corpus, purpose of investments, type of instrument invested in, etc.
Marketing Planning – Market defines the role and responsibilities of marketing executives in such a way as to achieve the goals of the firm. Its Concept, Characteristics, and Importance, with Meaning and Definition of Marketing Planning. A marketing plan may be part of an overall business plan. A solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, without a sound strategic foundation, it is of little use to a business. Mostly, confusion of the question; What is the Difference Between Marketing and Selling? Read and share the given article in Hindi.
Explain Market or Marketing Planning: Concept, Meaning, Definition, Characteristics, and Importance!
Explanation of Market or Marketing Planning and its Concept, Characteristics, and Importance. Its planning involves objectives and plans with a 2-5 year time horizon and is thus further from the day-to-day activity of implementation. Because of their broader nature and longer-term impact, plans are typically developed by a combination of higher-level line managers and staff specialists. If the specialists take over the process, it loses the commitment and expertise of the line managers who are responsible for carrying out the plan.
The planning process is probably more important than the final planning document. Also, Integrated Marketing Communications (IMC), the process ensures that a realistic, sensible, consistent document is produced and leads to important organizational learning and development in its own right.
The concept of Market or Marketing Planning:
A business firm has to make various marketing decisions. These decisions actually emerge from the complex interaction of a large number of persons carrying out diverse responsibilities in the marketing organization. Being part and parcel of the overall management, the marketing executives are deeply involved in the process of planning.
It emphasizes the allocation of marketing resources in the best and most economical way. It gives an intelligent direction for marketing operations. Also, It involves the preparation of policies, programmes, budgets etc., in advance for carrying out the various activities and functions of marketing to attain the marketing goals.
According to the American Marketing Association,
“Marketing planning is the work of setting up objectives for marketing activity and of determining and scheduling the steps necessary to achieve such objectives.”
Also, Planning is the first management function to be performed in the process of management. It governs the survival, growth, and prosperity of any enterprise in a competitive and ever-changing environment.
The connecting link of markets to marketing is the process and the function of marketing management. Also, Marketing management is the blending factor of markets and marketing. Today the consumer is a complicated, emotional, and confused individual. His buying is based on subjectivity and not often backed by objectivity.
A firm cannot afford to travel randomly, it has to travel with the support of a route map. Every company must look ahead and determine where it wants to go and how to get there. Its future should not be left to chance. To meet this need, companies use two systems a strategic planning system and a marketing planning system.
Strategic Planning;
Strategic planning provides the route map for the firm. Its planning serves as a hedge against risk and uncertainty. Strategic planning is a stream of decisions and actions which lead to effective strategies and which in turn help the firm to achieve its objectives. Also, The strategy is not something that can take out of one’s pocket and pushed into the market all of a sudden.
“No magic formula exists to prepare for the future. The requirements are an excellent insight to understand changing consumer needs, clear planning to focus our efforts on meeting those needs, and flexibility because change is the only constant. Most important, we must always offer consumers-products of quality and value, for this is the one need that will not change.”
Marketing has been described as the railway engine which pulls all the other departmental carriages along. Also, It is the interface between the enterprise and its market.
We had explained that marketing places the consumer at both the beginning and the end of the business process. Any firm practicing marketing in the proper sense has to identify correctly the needs of the consumer, translate the needs into suitable products and services, deliver those products and services to the total satisfaction of the consumer and through the process generate profits for the firm.
Meaning and Definition of Market or Marketing Planning:
It is a comprehensive blueprint that outlines an organization’s overall marketing efforts. Also, It typically results in a marketing strategy that can use to increase sales for the business producing it.
The definition of marketing planning as given by some prominent scholars has been given below:
Stephen Morse:
“Marketing planning is concerned with the identification of resources that are available and their allocation to meet specified objectives.”
It is a formal and systematic approach towards the planning of all marketing activities-product positioning, price setting, distribution channels, etc.
Market planning, as a rational activity, requires thinking; imagination, and foresight. Market analysis, market projection, consumer behavior analysis, and marketing-guided conclusions are based on data and measurements drawn from internal and external environments.
Also, It is a forward-looking and dynamic process designed to promote market-oriented or consumer-oriented business actions.
Planning is concerned with two things: (i) Avoiding incorrect actions, and (ii) Reducing the frequency of failure to exploit opportunities. Thus, marketing planning has both an optimistic and pessimistic component.
Marketing planning is done by the marketing department. Various subdivisions and sections under the department give their proposals based on which the overall company marketing plans develop and design.
Planning is a process of deciding in advance what to do and how to do it. If the marketing planner desires to achieve a target market at some future date and if he needs some time to decide what to do and how to do it, he must make the necessary marketing decisions before taking action.
Planning is basically a decision-making process. Also, Marketing planning is a program of marketing-based actions regarding the future with the object of minimizing risk and uncertainty and producing a set of interrelated decisions.
What do they mean?
It is the preface to any business enterprise. Also, Planning is deciding at present as to what we are going to do in the future. It involves rot only anticipating the consequences of decisions but also predict the events that are likely to affect the business.
It is to direct the company marketing efforts and resources towards present marketing objectives like growth, survival, minimizing risks, maintain status-quo, profit maximization, service to customers, diversification, and image building and so on.
“Marketing plan” is the instrument to implement the marketing concept; it is one that links the firm and the markets; it is the foundation for all corporate plans and planning.
The marketing plan is the document of the future course of action that spells out how the resources at the command of the firm are to deploy to achieve the marketing goals. Simply stated, It is a written document that specifies in detail the firm’s marketing objectives and how marketing management will use controllable marketing tools such as product design, channels, promotion, and pricing to achieve these objectives.
It is the central instrument for directing and coordinating marketing efforts. It is to do with selling objectives and designing strategies and programs for achieving these objectives of marketing. Also, They are a blueprint for marketing action. It is a written document containing strategies to achieve preset goals.
Marketing Planning: Concept, Characteristics, and Importance, #Pixabay.
Importance of Market or Marketing Planning:
It is a systematic and disciplined exercise to formulate marketing strategies. Marketing planning can be related to the organization as a whole or SBU (strategic business units).
Market planning is a forward-looking exercise; which determines the future strategies of an organization with special reference to its product development, market development, channel design, sales promotion, and profitability.
We may now summaries the importance of marketing planning in the following points:
It helps in avoiding future uncertainties.
Also, It helps in management by objectives.
They help in achieving objectives.
It helps in coordination and communication among the departments.
It helps in control.
Also, They help the customers in getting satisfaction.
Minimize future uncertainties:
To minimize future uncertainties, an expert marketing manager makes future marketing strategies and programs based on present trends and conditions of the firm.
By effective market planning and future forecasting, he not only minimizes future uncertainty; but, also successfully fulfills the objectives of the firm.
Clarification of Objectives:
The clear-cut objective of the organization helps in keeping the efforts of the management in proper lines. These are very useful in formulating the managerial functions like organizing, directing and controlling.
Proper marketing planning and decision-making help in determining the objectives of the organization.
Better Coordination:
The marketing planning helps in coordinating all the managerial activities of the firm. It not only helps in coordinating the work of its own department but also helps in coordinating the managerial activities of all the other departments to achieve the overall objectives and goals of the firm.
Helpful in Controlling Function:
The marketing planning sets the performance standards and these compare with the actual performance of various departments.
If these variances are favorable, efforts make to maintain them; and, if these variances are unfavorable, efforts are made to remove them.
Increases efficiency:
Marketing planning helps in increasing the managerial efficiency of the firm. It is meant to ensure efficient allocation & utilization of resources. They also compare the results with the set standards to ensure the efficiency of the organization.
It directs all the managerial activities of the firm and controls these activities. They develop the feeling of sincerity and a sense of responsibility among the managerial executives by defining the duties, rights, and liabilities of all employees of the firm; which in turn increases the efficiency of the firm.
Consumer satisfaction:
Under marketing planning, the needs and wants of the customer (or consumer) study properly; and, marketing activities are channelized to provide better customer satisfaction; which in turn maximizes the profit of the firm.
Therefore, by concentrating on customer satisfaction, marketing management increases market share and revenue of the business enterprise.
What does the Capital Market mean? The capital market is a market which deals in long-term loans. It supplies industry with fixed and working capital and finances medium-term and long-term borrowings of the central, state and local governments. The Capital Market functions through the stock exchange market. A stock exchange is a market which facilitates buying and selling of shares, stocks, bonds, securities, and debentures. The capital market deals in ordinary stock are shares and debentures of corporations, and bonds and securities of governments. So, what is the topic we are going to discuss; Indian Capital Market: Understand their concept by Nature, Classification, Growth, and Development!
Here are explained; Indian Capital Market: The Concept of Market understand by their Nature, Classification, Growth, and Development!
The capital market plays an important role in immobilizing saving and channel is in them into productive investments for the development of commerce and industry. It is not only a market for old securities and shares but also for new issues shares and securities. In fact, the capital market is related to the supply and demand for new capital, and the stock exchange facilitates such transactions.
Thus the capital market comprises the complex of institutions and mechanisms through which medium-term funds and long-term funds are pooled and made available to individuals, business and governments. It also encompasses the process by which securities already outstanding are transferred.
Nature of Indian Capital Market:
Like the money market, capital market in India is dichotomized into organized and unorganised components. The institution of the stock exchange is an important component of the capital market through which both new issues of securities are made and old issues of securities are purchased and sold. The former is called the “new issues market” and the latter is the “old issues market”. The stock exchange is, thus, a specialist market place to facilitate the exchanges of old securities. It is known as a “secondary market” for securities.
The stock exchange dealings for “listed” securities are made in an open auction market where buyers and sellers from all over the country meet. There is a well-defined code of bye-laws according to which these dealings take place and complete publicity is given to every transaction. As far as the primary market or new issues market is concerned, it is the public limited companies instead of a stock market that deals in “old issues” that raises funds through the issuance of shares, bonds, debentures, etc. However, to conduct this business, the services of specialized institutions like underwriters and stockbrokers, merchant banks are required.
The capital market in India is divided into the gilt-edged market and the industrial securities market. The gilt-edged market refers to the market for Govt. and semi-govt. securities. The industrial securities market refers to the market for equities and debentures of companies.
The industrial securities market is further divided into:
New issues market, and.
Old capital market.
Both markets are equally important but often the new issue market is much more important from the point of economic growth. Economic liberalization provides a strong stimulus to the security market. There is a tremendous growth in the number of issues, the amount raised, listed companies, listed stock, market turnover, and capitalization etc. Security market witnessed steep rising curve in the decades of 80s.
Many new financial instruments were introduced; new institutions like Stock Holding Corporation of India Ltd, National Stock Exchange, Over the Counter Exchange of India Ltd. etc. were created. Further, various steps were taken to protect the interests of investors and streamlining the trading mechanism. Computerization is done for faster settlement of transactions. Screen-based trading provides the full transparency of the transactions. After the abolition of the managing agency system in 1970, the importance of the capital market in India cannot be overemphasized.
The Indian capital market has now been a very vibrant and growing market. It is one of the leading capital markets in developing countries. We have the second largest number of listed companies (6500) in the world, next only to the USA have the largest number of exchanges in any country—23 Stock Exchanges. We have 15 million investors. And in the decade of 80s, the amount raised from the Indian capital market went up from Rs. 200 crores a year to Rs. 10,000 crores a year.
The Indian capital market is the market for long term loanable funds as distinct from money market which deals in short-term funds. It refers to the facilities and institutional arrangements for borrowing and lending “term funds”, medium term, and long term funds. In principal capital market loans are used by industries mainly for fixed investment. It does not deal in capital goods but is concerned with raising money capital or purpose of investment.
The Classification of Indian Capital Market:
The capital market in India includes the following institutions;
Commercial Banks.
Insurance Companies (LIC and GIC).
Specialized financial institutions like IFCI, IDBI, ICICI, SIDCS, SFCS, UTI etc.
Provident Fund Societies.
Merchant Banking Agencies, and.
Credit Guarantee Corporations.
Individuals who invest directly on their own insecurities are also suppliers of the fund to the capital market. Thus, like all the markets the capital market is also composed of those who demand funds (borrowers) and those who supply funds (lenders). An ideal capital market attempts to provide adequate capital at a reasonable rate of return for any business, or industrial proposition which offers a prospective high yield to make borrowing worthwhile.
The Indian capital market is divided into the gilt-edged market and the industrial securities market. The gilt-edged market refers to the market for government and semi-government securities, backed by the RBI. The securities traded in this market are stable in value and are much sought after by banks and other institutions. The industrial securities market refers to the market for shares and debentures of old and new companies. This market is further divided into the new issues market and old capital market meaning the stock exchange.
The new issue market refers to the raising of new capital in the form of shares and debentures, whereas the old capital market deals with securities already issued by companies. The capital market is also divided between the primary capital market and secondary capital market. The primary market refers to the new issue market, which relates to the issue of shares, preference shares, and debentures of non-government public limited companies and also to the realizing of fresh capital by government companies, and the issue of public sector bonds.
The secondary market, on the other hand, is the market for old and already issued securities. The secondary capital market is composed of industrial security market or the stock exchange in which industrial securities are bought and sold and the gilt-edged market in which the government and semi-government securities are traded.
The Growth of the Indian Capital Market:
The following growth below are;
Before Independence of Indian Capital Market:
Indian capital market was hardly existent in the pre-independence times. Agriculture was the mainstay of the economy but there was hardly any long term lending to the agricultural sector. Similarly, the growth of industrial securities market was very much hampered since there were very few companies and the number of securities traded in the stock exchanges was even smaller.
Indian capital market was dominated by the gilt-edged market for government and semi-government securities. Individual investors were very few in numbers and that too was limited to the affluent classes in the urban and rural areas. Last but not least, there were no specialized intermediaries and agencies to mobilize the savings of the public and channelize them to invest.
After Independence of Indian Capital Market:
Since independence, the Indian capital market has made widespread growth in all the areas as reflected by the increased volume of savings and investments. In 1951, the number of joint stock companies (which is a very important indicator of the growth of capital market) was 28,500 both public limited and private limited companies with a paid up capital of Rs. 775 crore, which in 1990 stood at 50,000 companies with a paid up capital of Rs. 20,000 crore. The rate of growth of investment has been phenomenal in recent years, in keeping with the accelerated tempo of development of the Indian economy under the impetus of the five-year plans.
Indian Capital Market: Understand their concept by Nature, Classification, Growth, and Development! Image credit from #Pixabay.
The Development of Indian Capital Market:
Here we detail about the eight developments in the Indian capital market.
Financial Intermediation:
The Indian capital market has grown due to the innovation of the mechanism of indirect financing. This innovation has enhanced the efficiency of the flow of funds from ultimate savers to ultimate users through newly established financial intermediaries like UTI, LIC, and GIC. The LIC has been mobilizing the savings of households to build a “life fund”.
It has been deploying a part of “life fund” to purchase the shares and debentures of the companies. Until 1991 UTI was amongst the top ten shareholders in one out of every three companies listed in the Stock Exchange in which it had a shareholding. Likewise, UTI has been mobilizing savings of households through the sale of “units” to invest in securities of “blue-chip” companies.
In short, financial intermediaries like LIC, UTI, and GIC have activated the growth process of the Indian capital market. It is evident from the rising intermediation ratio. The intermediation ratio is a ratio of the volume of financial instruments issued by the financial institutions, i.e., secondary securities to the volume of primary securities issued by non-financial corporate firms rose from 0.27 during 1951-56 to 0.37 during 1979-80 to 1981-82.
Underwriting of Securities:
The New Issue Market as a segment of the capital market can be activated through institutional arrangements for the underwriting of new issues of securities. During the pre-independence period, the volume of securities underwritten was quite minimal due to lack of an adequate institutional arrangement for the provision of underwriting. Stockbrokers and banks used to perform this function.
In recent years, the volume and amount of securities underwritten have tremendously increased owing to the increasing participation of specialized financial institutions like LIC and UTI and the developed banks like 1FC1,1CICI and IDBI in underwriting activities. It is evident from the fact that the number of securities underwritten was only 55 percent in 1960-61, whereas at present it is about 99 percent.
Response to the Offer of Public Issues of Shares and Bonds:
Traditionally investors in India being risk-investors had been reluctant to invest in shares of public limited companies. Hence, industrial securities as a form of investment were not popular in India before 1951. However, since 1991 public response to corporate securities has been improving. But equity-cult has yet to be developed in rural areas.
It is important to point out that the public response to new issues of shares and bonds depends upon number of factors such as rates of return on industrial securities relative to rates of return on non-marketable financial assets and real assets, government’s monetary policy and fiscal policy and above all legal protection to investors in recent years.
All the above-mentioned factors have contributed to the growth of public response to the new issue of corporate securities. In short, growing response to public issues has strengthened the Indian capital market. It is evident from the fact that the number of shareholders rose from 60 lakh in 1985 to 160 lakh in 1994.
Merchant Banking:
The role of merchant banking in India’s capital market can be traced back to 1969 when Grind lays Bank established a special cell called the “Merchant Banking”. Since then all the commercial banks have set up the “Merchant Banking Division” to play an important role in the capital market. The merchant banking division of commercial banks advises the companies about economic viability, financial viability and technical feasibility of the project.
They conduct the initial ‘spade work” to find out the investment climate to advise the company whether the public issue floated would be fully subscribed or under-subscribed. The merchant banks in India act as the underwriter as well as the manager of new issues of securities. The Securities and Exchange Board of India (SEBI) regulates all merchant banks as far as their operations relating to issue activity are concerned. To sum up, the emergence of merchant banking has strengthened the institutional base of the Indian capital market.
Credit Rating Agencies:
Of late, credit rating agencies have emerged in the financial sectors. This is an important development for the growth of the Indian capital market. Investment Information and Credit Rating Agency of India (ICRA) rates bonds, debentures, preference shares, Corporate Debentures, and Commercial Papers.
As Credit Rating Information Services of India Ltd. (CRISIL) is a pioneer in credit rating, it rates debt instruments of banks, financial institutions, and corporate firms. The credit assessment of companies issuing securities helps in the growth of New Issue Market segment of the capital market.
Mutual Funds:
Mutual funds companies are investment trust companies. Mutual funds schemes are designed to mobilize funds from individuals and institutional investors, who in exchange get units which Can be redeemed after a certain lock-in period, at their Net Asset Value (NAV). The mutual fund schemes provide tax benefits and buyback facility. The Unit Trust of India (UTI) can be regarded as the pioneer in the setting up of mutual funds in India. Of late, commercial banks have also launched in India mutual funds schemes.
Can-stock scheme of the Canara bank and LIC’s scheme, such as Dhanashree, Dhanaraksha, and Dhanariddhi are mutual funds schemes. Since mutual funds schemes help to mobilize small savings of the relatively smaller savers to invest in industrial securities, so these schemes contribute to the growth of the capital market. The total assets of mutual funds companies increased from Rs. 66,272 crore in 1993-94 to Rs. 99,248 crore in 2005 and to Rs. 4,13,365 crore in 2008. The investment of mutual funds in the secondary market influences the share prices in the stock exchange.
Stock Exchange Regulation Act:
The growth of capital market would not have been possible had the Government of India not legislated suitable laws to protect the investors and regulate the Stock Exchanges. Under this Act, only recognized stock exchanges are allowed to function. This Act has empowered the Government of India to inquire into the affairs of a Stock Exchange and regulate it’s working. into the affairs of a Stock Exchange and regulate it’s working.
The Government of India established the Securities and Exchange Board of India (SEBI) on April 12, 1988, through an through an extraordinary notification in the Gazette of India. In April 1992, SEBI was granted statutory recognition by passing an Act. Since 1991, SEBI has been evolving and implementing various measures and practices to infuse greater transparency in the capital market in the interest of investing public and orderly development of the securities market.
Liberalization Measures:
Foreign Institutional Investors (FII) have been allowed access to the Indian capital market. Investment norms for NRIs have been liberalized, so that NRIs and Overseas Corporate Bodies can buy shares and debentures, without prior permission of RBI. This was expected to internationalize the Indian capital market.
To sum up, the Indian capital market has registered an impressive growth since 1951. However, it is only since the mid-1980s that new institutions, new financial instruments, and new regularity measures have led to speedy growth of the capital market. The liberalization measures under the New Economic Policy (NEP) gave a further boost to the growth of the Indian capital market.
Marketing and Selling are both activities aimed at increasing revenue. They are so closely entwining that people often don’t realize the difference between the two. This is particularly true in the case of small businesses, which often equate marketing with selling deliberately due to organizational and resource limitations. These two are the most misconstrued then again there exists a best line of distinction between Marketing and Selling the concept, that lies in their meaning, process, activities, management, outlook, and comparable different factors. So, what is the question we are going to discuss; What is the difference between Marketing and Selling?
Here are explained; Differences between Marketing and Selling with their Definition and Concept.
Marketing is an ancient art and is present everywhere. Good marketing has become an increasingly vital ingredient for success. It is a comprehensive term, which includes a lot of research in selling, advertising, and distributing goods. Marketing is a series of different steps and processes which help in getting the products to the consumer from the producer.
Definition of Marketing:
Marketing: Basically, it is a management process through which products and services move from concept to the customer. It includes the identification of a product, determining demand, deciding on its price, and selecting distribution channels.
The UK-based Chartered Institute of Marketing (CIM) defines the term as follows:
“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.”
Below is the American Marketing Association’s definition:
“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.”
Selling: Selling is first and foremost a transaction between the seller and the prospective buyer or buyers where the money stands exchanged for goods or services. So the best way to define selling is to focus on the sales skills that are necessary to make that transaction happen. Defining selling as the art of closing the deal encapsulates selling’s essence.
In the language of Philip Kotler:
“The selling concept holds that consumers if left alone, will ordinarily not buy enough of the organization’s product. The organization must, therefore, undertake an aggressive selling and promotion effort.”
The advertising and marketing thought is an enterprise idea, which states that the company’s success lies in turning into greater fantastic than the rivals, in producing, delivering, and speaking increased purchaser cost to the goal market. It depends on 4 elements, i.e. the goal market, built-in marketing, purchaser needs, and profitability. The idea starts with a unique market, stresses patron needs, coordinates things to do that have an impact on customers, and reaps earnings with the aid of pleasurable customers.
The concept holds that an association can acquire its objective of income maximization, in the lengthy run, by figuring out and working on the wishes of the present day and potential buyers. As well, the central thought of advertising and marketing thought is to fulfill the desires of the customer, and the use of the product. Hence, all the choices stood taken by using the association preserve in thought the delight of consumers.
The promoting thinking holds that if corporations and buyers are left isolated, then the shoppers are no longer going to purchase enough merchandise manufactured with the aid of the company.
The idea can observe belligerently, in the case of items that are now not sought, i.e. the items which the patron doesn’t suppose of purchasing, and additionally when the company is running at extra than a hundred percent capacity, the association goals at promoting what they produce, however now not what the market demands. Hence, the purchaser wishes to set off to purchase the products, thru aggressive promoting and promotional methods such as advertising, private selling, and income promotion.
The essence of promoting the notion is to promote what the employer produces, through convincing, coaxing, luring, or persuading buyers, as a substitute for what stands preferred by the customer. Also, the thought focuses on producing earnings with the aid of maximizing sales.
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Difference between Marketing and Selling:
The following basic differences of key-point below are:
In the Marketing differences:
The marketing concept applies to developed economies; where supply is more as compared to demand- amidst intensely competitive conditions. As such, the selling of goods is the biggest problem.
Under the marketing concept, there is a long-run perspective; concerned with winning consumers permanently and capturing the largest “market share” by providing maximum consumer satisfaction.
Marketing is a wider concept. It includes selling plus a large number of functions viz. marketing research, pricing, promotions, packaging, and a host of other functions.
Marketing is consumer-oriented. It emphasizes consumers and the maximization of their satisfaction.
Marketing starts with marketing research; next, do a production based on marketing research outcomes, and finally, do the selling.
The Basic objective of marketing is profit maximization through maximizing consumer satisfaction.
Marketing follows an integrated approach to organizational structuring. All departments of business enterprises are restructuring with a marketing orientation.
There is great emphasis on after-sales service, under the marketing concept; to win customers permanently and ensure the long-term prosperity of the business enterprise.
Marketing is a philosophy of organization and management. Selling is a natural outcome of such a philosophy.
Under the marketing concept, demand creates appropriate marketing strategies.
In the Selling differences:
Selling is production Oriente. It emphasizes production and its efficiency.
The selling concept is applicable to under-developed economies; where supply is less as compared to demand. As such selling goods is no problem.
In the under-selling concept, there is a short-term perspective; concerned with making sales and earning profits.
Selling is a narrower concept. It is a part of the marketing concept; so far “selling” is concerned. It includes limited marketing functions that are imperative for selling.
“Selling” starts with the production; and ends with the selling of goods to the consuming public.
The Basic objective of selling is profit maximization through sales maximization.
There is the independent status of production, marketing, and other business enterprise departments.
There is usually no attention to after-sales service, under the selling concept.
Selling follows a routine process of physical distribution of goods.
An Under-selling concept demand is presumed to be in existence.
What is the difference between Marketing and Selling?
The 5 differences between “Marketing” and “Selling” clear the main Concept:
There are a good many people who use the words “marketing” and “selling” interchangeably. There is a difference between the two terms so much so that their real meaning and content make them altogether quite distinct words.
The 5 basic differences can outline as under:
Scope:
“Marketing” involves the design of products acceptable to customers and the transfer of ownership between the sellers and buyers. However, “Selling” simply involves obtaining orders from customers and supplying them with the products. It stands more concerned about the sale of goods already produced.
Philosophy:
Marketing has philosophical and strategic implications. It directs toward the long-term objectives of growth and stability. On the other hand, selling is a mere tactical routine activity with a short-term perspective, under which customers take for granted as one homogeneous unit.
Occurrence:
Marketing begins much before the production of goods and services. It continues even after the sale because “after-sale services” may be necessary for satisfying the wants of customers.
However, selling comes after the product has been completed and it comes around with the delivery of the product to the customer. In other words, marketing begins before the manufacturing cycle, whereas selling comes at the end of this cycle.
Semantics:
Marketing, as a word, has a wider connotation which includes selling in its fold. Selling is a part of marketing that covers many other activities like marketing research, product planning and development, pricing, promotion, distribution, and the like. Thus, marketing means selling but selling does not mean marketing.
Emphasis:
In the case of marketing, the focus is on satisfying the wants of customers while selling emphasizes the need of the seller to convert products into cash. Also, Marketing is customer-oriented and seeks to earn profits through customer satisfaction. On the contrary, selling is product-oriented and seeks to increase sales volume.
Who they are Wholesaler and Retailer?Top 20 Differences – first, know their meaning;Wholesaler – A wholesaler is a company that buys products from manufacturers and sells them at low prices to retailers or other wholesalers. A wholesaler, in the words of S.E. Thomas, “Is a trader who purchases goods in large quantities from manufacturers and sells to retailers in small quantities”. And, Retailer – A retailer is a company that buys products from a manufacturer or wholesaler and sells them to end-users or customers. The primary difference between Wholesaler and Retailer; A person or business that sells goods to the public in relatively small quantities for use or consumption rather than for resale. So, what is the question we are going to discuss; What is the Difference between Wholesalers and Retailers?… Read in Hindi!
Here explains the Difference between wholesaler and retailer.
The following question is answering below;
Definition:
All consumer goods and products start at the manufacturer. The manufacturer most often designs and produces the product. The manufacturer then sells the finished product to a wholesaler because wholesalers often have relationships with retailers and distribution chains that manufacturers don’t have. The wholesaler, in turn, sells the product to a retailer that can market and sell the product to an end customer.
The term “Wholesaler” applies only to a merchant middleman engaged in selling the goods in bulk quantities. Wholesaling includes all marketing transactions in which purchases are intended for resale or are used in marketing other products. Thus, we can say that a wholesaler is a person who buys goods from the producer in bulk quantities and forwards them in small quantities to retailers.
Retailers are experts in marketing, sales, merchandise inventory, and knowing their customers. They purchase the goods from the manufacturers at cost and market them to consumers at retail prices. The retail price can be anywhere from 10 percent to 50 percent higher than the manufacturing cost. You can think of this as a marketing and advertising fee. Retailers spend millions of dollars on marketing campaigns to help sell the products they carry. These advertising budgets come from the markup on the goods.
Concept:
One of the main differences between wholesale and retail is the price of the goods. The wholesale price is always lower than the retail price. This is mainly because the retailer has to include many other costs while selling the goods. The retailer has to add costs like the salaries of employees, rents of shops, sales tax, and advertising of the goods that he buys from a wholesaler. A wholesaler does not worry much about all of these aspects which prompts him to sell goods at a lower price. The wholesaler has direct links with the manufacturer and buys products or goods directly from him.
On the other hand, a retailer has no direct contact with the manufacturer. In choosing the quality, the retailer has an upper hand. A retailer can choose the products with quality and discard the damaged ones as they only buy small amounts. On the contrary, the wholesaler will not have a say in the quality as he has to buy in bulk from the manufacturer.
This means that the retailer has the freedom to choose the products whereas the wholesaler does not have the freedom to choose the products. It can also be seen that retailers have to spend more on maintaining the retail space as they have to attract consumers. On the other hand, a wholesaler need not worry about the space as it is only the retailer who buys from him.
What is the Difference between the wholesaler and the retailer?
Top 20 Difference between Wholesaler and Retailer part one:
The following 10 Differences below are;
They are connecting links between the manufacturers and retailers, and They are connecting links between the wholesalers and the customers.
They purchase goods in large quantities from manufacturers. And, they purchase goods in small quantities from the wholesalers.
They deal with a limited number of products, and They deal with a variety of products for meeting the varied needs of consumers.
They need more capital to start their business, and they can start the business with limited capital.
The display of goods and decoration of the premises is not necessary for them. And, they lay more emphasis on window display and proper decoration of business premises to attract the customers.
Their business operations extend to different cities and places, and They usually localized at a particular place, area, or city.
They do not directly deal with the customers, and they have a direct link with the customers.
They do not extend free home delivery and after-sales services. And, they provide free home delivery and after-sales services to consumers.
Provide more credit facilities to retailers and they provide lesser credit facilities to the consumers and usually sell goods on a cash basis.
Wholesalers buy from the manufactures and sell goods to retailers. And, Retailers buy from the wholesalers and sell goods to the consumers.
Top 20 Difference between Wholesaler and Retailer part two:
The following 10 Differences below are;
Wholesalers usually sell on credit to the retailers, and Retailers usually sell for cash.
They specialize in a particular product, and They deal with different kinds of goods.
They buy in bulk quantities from the manufacturers and sell in small quantities to the retailers, and they buy in small quantities from the wholesalers and sell in smaller quantities to the ultimate consumers.
Wholesalers always deliver goods at the doorstep of the retailers, and Retailers usually sell at their shops. And, they provide door delivery only at the request of the consumers.
They may not possess expert knowledge regarding selling techniques. And, they must possess expert knowledge in the art of selling.
They enjoy the economies of bulk buying, freights and price, etc. and they do not avail such economies.
Their services can be dispensed with or can be eliminated from the chain of distribution, and they are an integral component of the distribution chain and cannot be eliminated.
A wholesaler need not provide shopping comforts like luxurious, interiors, provision of air-conditioning, trolleys, etc. And, a retailer usually provides shopping comforts mainly to attract customers.
As the wholesaler specializes in a particular product, he has to necessarily convince the retailers about product quality. Only then the latter will place an order. And, as the retailer deals in a variety of goods, he need not influence buyers. He can let the buyer choose any brand of the product he likes.
As per the custom of their trade, wholesaler allows the retailer trade discount each time the retailers buy. And, the retailers normally do not allow any discount to their customers. Some of them may offer a cash discount to bulk buyers. Sometimes, they may offer seasonal discounts.
What is the Speech of Marketing?Marketing is the study and management of exchange relationships. Marketing is the business process of creating relationships with and satisfying customers. Everybody lives by selling some products, services or ideas. Generally, marketing is considered selling and promotion. So, what is the question we are going to discuss; How should the Speech of Marketing be done?… Read in Hindi!
Here is the Concept of Marketing explained the Speech of Marketing.
It is but one of several marketing functions and that too not the most important one. It means taking certain other steps, such as identifying customer needs, developing a good quality product, fixing reasonable prices, distributing and promoting the product effectively. Then his goods will sell very easily. According to Kotler and Armstrong as,“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others.” However, making a sale, i.e., selling is the old sense of marketing. In its new sense, marketing is satisfying customer needs. Selling is only one aspect of marketing.
The Concept of Marketing:
The “Consumer-oriented” marketing has led to a new philosophy of doing business known as “marketing concept”. Under this concept, marketing is much more than a physical process of distributing goods and services. It is a distinct philosophy of business under which all business activities are integrated and directed to supply the goods and services which customers want, in the way they want, at the time and place where they want and at a price which they are able and willing to pay for.
How should the Speech of Marketing be done? Image credit from #Pixabay.
Speech of Marketing:
Marketing is a vital function of any business. An enterprise in which marketing is absent or marketing is incidental is not a business. The origin of marketing can be traced to the oldest use of the exchange system i.e., the barter era. Industrialization is important for marketing evolution. With the onset of mass production, better transportation, and more efficient technology, goods and services could be made in large volume and marketed at optimum prices.
This is the production era of marketing. With more and more companies taking up manufacturing activities and expanding production capabilities, many of them employed, Sales-force and used advertising for the sale of their products. This is the beginning of the sales era of marketing. This stage commenced in the advanced countries in the early 1800ad and for a developing country like India, it started in the early last century.
As the competition grew and supply outstripped demand, the business units created marketing departments to conduct consumer research and advise the management on how to price, distribute and promote their products. This is the onset of the marketing department era when the research was used to determine consumer needs. Subsequently, the marketing company Era commenced and integrated consumer research and analyzes into marketing concept, marketing philosophy, customer service, customer satisfaction J and relationship marketing.
The above five elements of the marketing concept are very important for the success of any business organization. A consumer orientation means caring for consumer satisfaction and goal-orientation aims at achieving company goals.
A market-driven approach means being aware of the structure of the marketplace and the value-based philosophy means offering goods and services for customer satisfaction. A company coordinates all the activities relating to goods and services with an integrated marketing focus for production, finance, human resource, and marketing functions.
What is Stealth Marketing? Stealth or Cheating marketing both mean the same, but in the modern era, both of them have different meanings on different worlds. In both marketing without realizing that the products are actually being marketed for them, it is not clear to consumers. An indirect way of marketing products, stealth marketing focuses on creating buzz among the audience as a whole without letting people realize that products are actually being marketed to them. Stealth marketing is advertising something to a person, without them realizing they’re being marketed to. It’s a low-cost strategy that can be really valuable to a business, but the issue with stealth marketing is one of ethics. So, what is the question we are going to discuss; What does mean Stealth Marketing? with Explained…Read in Hindi!
Here are explained; What is Stealth Marketing? The concept with Meaning.
Due to the fact that new generations of consumers are becoming less drawn to the conventional, in your face advertising, advertising industries have created a more “Under the radar” approach of advertising. This is done by making consumers believe that they are responding to a promotion, rather than an advertisement. This promotional advertising is a more subtle approach to communication, as much of the public does not want to be associated with the obvious advertisement of products. This way, consumers don’t feel like they are being sold something, rather they feel like they are discovering something. This approach is called stealth or covert marketing, which employs marketing activities easily into consumer’s lives without awareness.
These campaigns stay away from traditional advertising, where consumers are continuously aware that they are being sold something. This new form of advertising is discreet when communicating messages to consumers, working best by “flying below the consumer’s radar”. Since this new form of advertising is so hidden and is able to take on multiple forms of media and public communication, consumers stand to lose privacy, trust, freedom of choice, and control due to the fact that they are unaware that they are being persuaded, taking away their power of consent. Stealth marketing presents new products and services by creating a “buzz” around it.
By quietly letting a few individuals know of a product or service it gives it a sense of exclusivity and “cool”. This relies heavily on consumers spreading the message to others in a unique way, making sure the product is talked about without appearing to be an advertisement or company-sponsored. The success of this is if the consumers believe that they “stumbled” upon it or found it by themselves, making them feel in the know and special. This form of promotion is effective due to the fact that a consumer’s purchase is greatly affected by the opinions of peers as we tend to rely on the advice of others when making decisions. This “buzz” can take on the form of the internet as it is the most efficient and cost-effective way to engage and persuade a consumer while not being directly in their face as compared to traditional advertising.
Social networking, viral marketing, and guerrilla campaigns are examples of this, due to the fact that they all capitalize on the fact that the internet can engage multiple masses of people all at once, having the ability to influence the values, behaviors, and beliefs of consumers. Brand pushers, who are hired actors approach people in real-life and promote products to them without actually saying that they are promoting a product or service. They do this by personally slipping out brands or products in conversation at bars, music stores, and tourist attractions. These actors come off as being genuine and approachable to make it seem believable. By planting products under the consumer’s nose it creates a chain of influence from a few trendsetters to hundreds.
An example of this that created controversy was Stony Ericsson’s Stealth Campaign in 2002. This was when 60 actors were hired to pose at ten tourist cities in the United States. These actors would ask unsuspecting people to take pictures of them with the newly launched T68i camera phone near a tourist attraction like the Empire State Building. Once a person agreed the scripted actor would demonstrate how to use the phone and would discuss the benefits and features of it. They would do all of this while never letting the other person know that they were representatives of Sony Ericsson.
Through this example, it can be first shown that this form of stealth advertisement has the ability to deceive consumers. These unknowing consumers were unaware that they were being sold a product because the marketing and commercial sponsor was not revealed to them. Secondly, it reflects a form of intrusion, as it reflects a violation of the consumer’s privacy. Other tourists and passersby were interrupted in their day and sightseeing, to assist another “tourist”, providing the actors with the opportunity to demonstrate the production of the camera. Thirdly, it exploits consumers; as it reflects how stealth marketing plays to take advantage of humans will help. This case of Sony Ericsson shows that they used the kindness of others into marketing a product. Privacy and surveillance come into play when retailers use stealth marketing through the use of a data-collection system. This is done through a retailer, where each customer is assigned a code number with their credit or debit card.
This code carries their personal purchase history which is then stored to be analyzed and tracked when purchasing other items. Specific promotions are then given to consumers who fit the profile of the products being endorsed. The only way to avoid being tracked by this system is if the customer pays with cash and doesn’t give out their phone number. Not only can their shopping be tracked but their web browsing, credit history and conversations on social networking sites can be tracked too without any knowledge that their personal information is being looked at. Much of this data collection system is based on an opt-out program, which is very difficult to understand and carry through, due to the fact that it takes so long to decipher all of the privacy policies, which may not actually be practiced.
These collection marketers rely on this so that a consumers attempt to control what they are tracking is stopped because of how difficult it is to do when personal data of you are already in the system. Only a quarter of consumers believe that by opting-out it only stops tailored ads, where the rest believe that by opting out it means that it would stop all types of online tracking. Many sites consumers browse on contain tracking tools and cookies which record any movements made online. This can be compared to video cameras and microphones being placed in a person’s home without consent or knowledge of it occurring. This inability to control what personal activities others can see, through the use of tracking software, is a violation of not only privacy but the trust of the consumer as well. Even though this new form of advertising and marketing is innovative and gets products and services to stand out in a very much crowded marketplace, the line of art and advertisement seems to be becoming blurred in today’s society. This can be seen with product placement in songs, TV, film and video games.
This brings up issues of ethics, where stealth marketing can be seen to attempt to manipulate the consumer’s mind, where it can be compared to subliminal advertising, as it aims for the consumer’s subconscious level of awareness. With traditional marketing, were consumers where able to choose the messages they wanted to engage with while ignoring advertisements they were not interested in, giving the consumers control on their thoughts and decisions, not the marketers. Supporters on stealth marketing say that this form of advertisement is more credible than traditional advertising due to the fact that few consumers believe athletes and celebrities who endorse products and services actually use them. As well as advocates of stealth marketing say that since consumers today are media and technology savvy, that will “Tune out commercials disguised as entertainment”.
However, in traditional marketing, there is an exchange between the consumer and the advertisement. The consumer has knowledge of the product, understands the persuasive tools used in the advertisement, and has knowledge of the marketing sponsor of the product or service. But, stealth marketing undermines the marketing sponsor and knowledge of persuasion, making it hidden from the consumer. This has the potential to deprive the consumer of any defense mechanisms, which help to make a conscious and informed decision when faced with advertisements or marketing communications. Unfortunately, this form of marketing is effective, as it fails to disclose full information of a product or service.
It takes away consumers tendencies to be suspicious or the belief that an advertisement has an ulterior motive. Through this, the consumer’s freedom of choice and decision is taken away with it. Due to the fact that stealth marketing has become so effective in today’s consumer world, it has the ability to threaten the choices of a broad demographic of consumers through a wide range of communication. As many consumers are now realizing its ability to control and abuse their defense mechanisms of persuasion, stealth marketing could create distrust and doubt within the public, which may become irreversible. This causes serious effects for not only “under the radar” advertising, but the already in danger traditional forms of advertising, asking the question: what is the future of advertisement if there is no market for it?
