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Marketing Marketing is a Process of defining, anticipating, creating, and fulfilling customers’ needs and wants for products and services Components of marketing The components of marketing are as under 1. Customer analysis 2. Selling products/services 3. Product and service planning 4. Pricing 5. Distribution 6. Marketing research 7. Opportunity analysis 1. Customer analysis Customer analysis is the study of consumer information. It consists of customer surveys, market positioning strategies, customer profiles, and market segmentation strategies. 2. Selling products/services It comprise of advertising, sales, promotion, publicity, sales force management, customer relations and dealer relations. 3. Product and service planning Product and service planning is combination of test marketing brand positioning, devising warrantees, packaging, product features/options, product style, and quality. 4. Pricing Pricing consist of all those strategies which directly benefits customers but indirectly benefited to firms. It’s consisting of forward integration, discounts, credit terms, condition of sale, markups, costs and unit pricing. 5. Distribution Distribution is the distributing products to all other related parties on demands. It consists of Warehousing, channels, coverage, retail site locations, sales territories, inventory levels and transportation. 6. Marketing research Marketing research is for future planning and further advancement of products and services. It consists of Data collection, Data input, Data analysis, Support all business functions. 7. Opportunity analysis It tell us about the opportunities exists in the environment around organization. It consists of Assessing costs, Assessing benefits, Assessing risks, and Cost/benefit/risk analysis. Marketing Audit Marketing Audit is an analysis of the internal and external factors which may affect a business's performance. It’s a comprehensive and systematic examination of a company's or business unit's marketing environment, objectives, strategies, and activities. Normally this includes the purpose of identifying and understanding problem areas and opportunities, and recommending a plan of action to implement. Marketing audit answer about these questions • Are markets segmented effectively? • Is the organization positioned well among competitors? • Has the firm’s market share been increasing? • Are present channels of distribution reliable and cost effective? • Does the firm have an effective sales force? • Does the firm conduct market research? • Are product quality and customer service good? • Are the firm's products/services priced appropriately? • Does the firm have an effective promotion, advertising, and publicity strategy? • Are marketing planning and budgeting effective? • Do the firm’s marketing mangers have adequate experience and training. Finance/Accounting The science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities. Finance consists of financial systems, which include the public, private and government spaces, and the study of finance and financial instruments, which can relate to countless assets and liabilities. Some prefer to divide finance into three distinct categories: public finance, corporate finance and personal finance. All three of which would contain many sub-categories. Functions of Finance/Accounting – 1. Investment decision (Capital budgeting) 2. Financing decision 3. Dividend decision Basic Financial Ratios Liquidity Ratios – measure the firm’s ability to come up the cash to pay for it’s near-term obligations. current ratio = current assets / current liabilities o Measures firm’s ability to satisfy short-term obligations as they come due quick ratio = (current assets – inventory) / current liabilities o Similar to current ratio, but excludes inventory from current assets, b/c inventory (which may be partially assembled or obsolete) is usually the least liquid asset. Activity Ratios – measure the speed with which the firm converts various accounts into sales or cash. inventory turnover = cost of goods sold / inventory o Measures how quickly a firm sells its goods average age of inventory = 365 / turnover ratio o Measures firm’s efficiency at selling its goods average collection period = accounts receivable / (annual sales / 365) o Measures firm’s ability to collect relative to its collection terms. average payment period = accounts payable / (annual purchases / 365) o Measures firm’s ability to pay obligations relative to their creditors’ collection terms. fixed asset turnover = sales / net fixed assets o Measures firm’s efficiency in using its fixed assets total asset turnover = sales / total assets o Measures firm’s efficiency in use of total assets Debt Ratios – measure extent to which firm uses money from creditors rather than stockholders to finance operations. Financial leverage (from fixed-cost sources of financing, such as debt or preferred stock) increases both risk and expected return of the firm’s securities. There are two types of debt ratios: 1) Balance sheet ratios measure outstanding debt relative to other sources of financing 2) Coverage ratios (income statement) measure firm’s ability to generate sufficient cash flow to make scheduled interest and principal payments. debt ratio = total liabilities / total assets o How large liabilities are in relation to the size of the firm. assets-to-equity (A/E) ratio (aka equity multiplier) = total assets / common stock equity (book value) debt-to-equity ratio = long-term debt / stockholders’ equity (book value) times interest earned ratio = earnings before interest and taxes / interest expense o Measures relative size of interest to earnings- firm’s ability to meet contractual interest payments. Profitability – relate a firm’s earnings to sales, assets or equity; among most closely-watched and widely quoted ratios. gross profit margin = gross profit / sales o Percentage of each sales dollar remaining after firm has paid for the cost of goods sold. operating profit margin = operating profit / sales o Percentage of each sales dollar remaining after deducting costs and expenses other than interest and taxes. net profit margin = earnings available for common stockholders / sales o Percentage of each sales dollar remaining after deducting all costs and expenses (including debt and preferred stock dividends). return on total assets (ROA) (aka return on investment) = earnings available for common stockholders / total assets o Management’s overall effectiveness in using the firm’s assets to generate returns to common stockholders. return on common equity (ROE) = earnings available for common stockholders / common stock equity o Return earned on the common stockholders’ investment in the firm. Finance/Accounting Audit An unbiased examination and evaluation of the financial statements of an organization. It can be done internally (by employees of the organization) or externally (by an outside firm). Its answer these questions about firms Where is the firm strong and weak as indicated by financial ratio analysis? Can the firm raise needed short-term capital? Can the firm raise needed long-term capital through debt and/or equity? Does the firm have sufficient working capital? Are capital budgeting procedures effective? Are dividend payout policies reasonable? Does the firm have good relations with its investors and stockholders? Are the firm’s financial managers experienced and well trained? Production/Operations Its consist of following activities Process Capacity Inventory Workforce Quality 1. Process Process means the Design of facility, Choice of technology, Facility layout, Process flow analysis, Facility location, Line balancing, and Process control. 2. Capacity Capacity means Forecasting, Facilities planning, aggregate planning, Scheduling, Capacity planning, and queuing analysis. 3. Inventory Inventory consists of Raw material, Work in process, finished goods and Materials handling. 4. Workforce Work force comprise of Job design, Work measurement, Job enrichment, Work standards, and Motivation techniques. 5. Quality It insures the quality of product it consists of Quality control, Sampling, Testing, Quality assurance, and Cost control. Production/Operations Audit An operational audit process is the series of steps an auditor takes to evaluate the operational activities of a given company or other organization. The process is very similar to the processes for other forms of audits, such as the financial audit, but the operational audit process is a much more in-depth review of the business. It usually does not focus on a single department or project, because each department plays a role in the overall operational process and is interconnected. Are suppliers of raw materials, parts, and subassemblies reliable and reasonable? Are facilities, equipment, machinery, and offices in good condition? Are inventory-control policies and procedures effective? Are quality-control policies and procedures effective? Are facilities, resources, and markets strategically located? Does the firm have technological competencies? SUMMARY AND EXPLANATION The internal steps for the marketing management process needs to be fully understood to be successful. First, you will want to know the basics within buying behavior. Find information on marketing while conducting your research on internal audit, accounts and finance, R & D. Next, find the marketing factors that are the best for you. Determine where your company is now positioned in the market against your competitor. Find the competitor potencies and compare with you in all marketing regards. Determine your objectives and your target, figure out what you expect your product will do in the market, and determine the strategy. Develop the strategies within the market for each area and make your plan. Determine your budget and put the plan into motion.