Management for All: February 2014

Monday, February 24, 2014

INFORMATION TECHNOLOGY AND INFORMATION SYSTEM

INFORMATION TECHNOLOGY (IT)

Information is the finished product for which data is the raw material. The dictionary defines information as processed data, which is used to trigger certain actions or gain understanding of what the data implies.

Information has also been defined as data that have been put into a meaningful and useful context and communicated to a recipient who uses it to make decisions. Information involves the communication and reception of intelligence or knowledge. It apprises and notifies; surprises and stimulates, reduces uncertainty, reveals additional alternatives or helps eliminate irrelevant or poor ones, and influences individuals and stimulates them to action. The information must be received by the recipient within the required time frame and the information must be free from errors.

The technology plays an important role in delivering timely and error free information to its recipients. Technology includes hardware, software, databases, and communication system. Hardware is a set of devices such as processor, monitors, keyboard, and printer that accept data, process them, and display them. Software is a set of programs that enable the hardware to process data. Database is also an integral part of IT system, which is a collection of related files, tables, relation etc. that stores data and the association among them. Network connects computing resources of an organization and facilitates sharing of hardware and software. The organization processes and people are integral part of an IT System.

Information Technology means the collection, storage, processing, dissemination, and use of Information. It is not confined to hardware and software but acknowledges the importance of man and the goals he sets for his technology, the values employed in making these choices, the assessment criteria used to decide whether he is controlling the technology and is being enriched by it.

COMPUTER SOFTWARE

The word software collectively refers to various kinds of programs used to operate computers and related devices. A program is a sequence of instructions that a computer can interpret and execute. Programs can be built into the hardware itself, or they may exist independently in a form known as software. Hardware describes the physical components of computers and related devices.

Software may be distributed on floppy disks, CD-ROMs, and on the Internet. It is usually stored on an external long-term memory device, such as a hard drive or magnetic diskette. When the program is in use, the computer reads it from the storage device and temporarily places the instructions in random access memory

(RAM). The process of fetching and then performing the instructions is called “running”, or “executing”, a program. Software programs and procedures that are permanently stored in a computer’s read-only memory (ROM) are called firmware.

The two main types of software are System Software and Application Software. Application software consists of programs that are aimed to help users in solving particular computing problems. Microsoft Internet Explorer for web browsing, Adobe Photoshop for developing computer graphics, Yahoo Messenger for instant messaging all lies in the application software category. The other class of software is the system software, which encompasses the programs that heavily interact with computer resources and provide services to other programs. Popular examples in this are Operating Systems (OS), hardware drivers, compiler etc.

SYSTEM SOFTWARE

Sunday, February 23, 2014

BUSINESS PERSPECTIVE OF IT

The impact of IT on a business has been tremendous. One of the advantages of IT systems for a business is the cost-performance ratio, which is better in case of computers. The labor cost increases every year but the cost of computer does not increase. A better and more powerful computer can be bought for the same price after a year. It is better to use computers for routine jobs as far as possible. The IT has been used in every business and for every function of a business. Some of the applications are as follows.

Finance and Accounting : IT has been used for forecasting revenues, determining the best sources and uses of funds and managing cash and other financial resources. IT has also been used to analyze investments and perform audits.

Sales and Marketing : IT has been used to develop new services, which may not exist without IT. IT has helped management of various organizations to determine the best location for production and distribution facilities. The operational data has been analyzed using IT to determine the best advertising and sales approaches. The product prices have been set using IT to get the highest total revenues. In other words, IT has been used for product analysis and price analysis.

Manufacturing : IT has been extensively used for processing customer orders, controlling inventory levels, developing production schedules and for monitoring product quality. A whole new discipline - Computer Aided Design and Computer Aided Manufacturing has evolved due to application of IT to design and manufacturing. The manufacturing is not what is used to be due to the use of computers, Computer Integrated Manufacturing (CIM) dominates the manufacturing sector.

Human Resource Management : Companies are using IT systems for screening applicants and conducting various tests.

Project Management : A range of software packages are available in the market for managing projects. These software products let the management set the schedules, milestones, facilitate communication among group members, and monitor the project progress. These products help in document and report preparation.

Data Analysis : Investment firms heavily use information systems to analyze stocks, bonds and options to provide better service to their clients.

INTERNET AND ITS BUSINESS APPLICATIONS

Saturday, February 22, 2014

THE ESSENTIAL COMMODITIES ACT (1955)

The Essential Commodities Act-1955 (India) affects production pricing and distribution decisions of a company. Its objective is to control, in the interest of the general public, the production, supply, and distribution of trade and commerce in certain commodities declared essential under the Act. Section 2 of the Act defines essential commodities and lists a large number of products that are included under it. Whenever a company markets these commodities, the provisions of the Act apply to it. The provisions influencing product and distribution decisions in particular have been discussed here while provisions relating to pricing have been elaborated later under impact of government control on pricing decisions.

Section 3 of the Act empowers the Central Government to regulate and or prohibit the production, supply, and distribution of essential commodities and trade and commerce therein if in its opinion it is necessary for maintaining or increasing supplies of any such commodity or for securing their equitable distribution and availability at fair price.

This power of the Central Government may be exercised in the following ways:

1) regulating by licences, permits or otherwise the production or manufacture of any essential commodity;

2) controlling the price at which it may be bought or sold;

3) regulating by licenses, permits or otherwise its storage, transport, distribution, disposal, acquisitions, use or consumption;

4) prohibiting the withholding from. sale of any essential commodity ordinarily kept for sale;

5) requiring any person holding its stock to sell the whole or a part of it to the Government.

The Act imposes both civil and criminal liability on the person for the contravention of the orders made under this Act.

The Prevention of Food Adulteration Act (1954)

The Prevention of Food Adulteration Act (India) affects decisions of companies manufacturing food products in respect of more than one element of the marketing mix, viz. production, promotion and distribution. The provisions of the Act as they affect these component have been discussed here.

The objective of the Act is to protect the health of the public by prohibiting adulteration of food articles. The Act prohibits the production, storage, distribution and sale of adulterated and misbranded food articles and ensures purity in the articles of food.

An adulterated food article is one which is injurious to public health when:

· the 'product quality is not as demanded or claimed.

· it contains an injurious substance.

· any constituent of the article has either been substituted by inferior substance or been taken away it had been prepared, packed, or kept under insanitary conditions.

· it is unifit for human consumption because it is filthy, putrid, rotten, decomposed, insect infested, etc.

· it is poisonous or deleterious

· it is obtained from a deceased animal

· it contains colouring matter other than that prescribed

· it contains a prohibited preservative

· its quality or purity falls below the prescribed standards.

A misbranded product, on the other hand, is one, which:

· is a deceptive imitation of or resembles an existing product

· is falsely stated to be a product of another place or country

· is sold by a name belonging to another article of food

· is so coloured, flavoured etc., that the article is made to appear of greater value than it really is

· makes false claims

· does not show clearly on the package the name and address of the manufacturer, and its contents

· bears any false or misleading information regarding its contents

· bears on the package or the label the name of a fictitious producer of the article

· contains any artificial flavouring, colouring, etc. without stating that fact

· is not labelled in accordance with the requirements of this Act.

Friday, February 21, 2014

Industrial Development and Regulation Act

The Industries (Development and Regulation) Act, 1951

The Industrial Development and Regulation Act, 1951 is an important piece of legislation affecting the industrial sector of the country.

The provisions of this Act not only influence the product decisions, but also the pricing and distribution decisions of companies in India.

In order to equip the new challenges posed by the changed national and global economic environment the government was compelled to issue the new industrial policy statement on 24th July 1991 which incorporates various liberalisation measures directed towards unshackling the Indian industry from Administrative and legal controls.

Objectives

The Act, provides Central government means of implementing the industrial policy. The preamble to the Act states that I (D&R) Act is an act to provide for the development and regulation of certain industries which are specified in the first schedule of the Act known as "Scheduled Industries". The central government has no powers to add any new undertakings to the first schedule mentioned above.

The central government has framed the "Registration and licensing of Industrial undertaking Rules 1952" which prescribes the general procedures to be followed for the purpose of regulation and licensing of an industrial undertaking.

MRTP Act - 1969

The MRTP Act, of 1969 is an important piece of socio-economic legislation. It has a significant impact on the industrial structure and marketing practices of business firms in India. Though the act is relatively a small enactment, yet it is considered to be a complex one, and has far reaching consequences for the firms.

The Principal objectives of this Act as spelt out in the preamble were:

i) Prevention of concentration of economic power to the common detriment

ii) For the control of monopolies

iii) For the prohibition of monopolistic trade practices

iv) Prohibition of restrictive trade practices

Chapter 1 of the MRTP Act, besides containing definitions of the relevant terms deals with other preliminary provisions relating to the extent and the applicability of the act. The main provisions are:

i) Regulating expansions, mergers and amalgamations and appointment of directors in respect of ‘dominant undertakings' having assets of rupees one crore and more and of undertakings which by themselves or with inter-connected undertakings have assets of not less than Rs. 20 crores in value.

ii) Regulating the standing of new undertakings which would become inter-connected undertakings of such existing undertakings the total assets of which exceed Rs. 20 crores.

iii) Control over and prohibition of monopolistic and restrictive trade practices as are found to be prejudicial to public interest.

CYBER MARKETING

WHAT IS CYBER MARKETING?

Cyber marketing term became popular when computers started getting used in marketing extensively. Earlier, computers were used more for storing, processing and reporting of various marketing related information. But, with the entry of internet the online data handling possibilities have virtually exploded the use of computer. This application has multiplied the use of computers at consumers’ homes faster than among the organisations. This fact has helped marketers substantially to look into cyber marketing. As a result, cyber marketing today is also seen more as internet based marketing rather than just computer based marketing. However, for our purpose, we shall define cyber marketing as that part of marketing which involves extensive use of computers, especially the internet.

Cyber marketing profitably reinforces the concepts of marketing with the power of internet. Thus, it strengthens the existing delivery of marketing outputs and also opens newer avenues of marketing which were not possible to achieve before the arrival of internet. For example, a marketer today can keep track of millions of customers simultaneously, segment them online, offer customised products to individual customers, fix different prices, provide varying contents and styles of information and deliver the products through appropriate modes of distribution to each of these customers. The details of such transactions and the characteristics of each of these customers can be stored for their dynamic utilisation in future marketing opportunities with the customers. These possibilities were only the dreams of earlier marketers.

Sunday, February 16, 2014

GOVT. CONTROL ON BUSINESS

In India a number of laws affecting business have become operational over the years. The important ones affecting marketing are listed below:

1) The Indian Contract Act, 1872

2) The Indian Sale of Goods Act, 1930

3) The Industries (Development and Regulation) Act, 1951

4) The Prevention of Food Adulteration Act, 1954

5) The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954

6) The Essential Commodities Act, 1955

7) The Companies Act, 1956

8) The Trade and Merchandise Marks Act, 1958

9) The Monopolies and Restrictive Trade Practices Act,. 1969 (MRTP Act)

10) The Patents Act, 1970

11) The Standards of Weights and Measures Act, 1976

12) The Consumer Protection Act, 1986.

Some of the legislations mentioned above apply to every undertaking, irrespective of the nature of the product sold or the service provided by it like the Contract Act, the Sale of Goods Act, the Companies Act, the Trade and Merchandise Marks Act and the Standards of Weights and Measures Act, The MRTP Act, however, does not apply to public undertakings, government-managed private undertakings, financial institutions and co-operative societies.

Thursday, February 13, 2014

SALES MANAGEMENT

Selling is done by the salesforce either directly to customers, such as in case of industrial salesmen or to retailers, as in case of salesmen merely supplying shopkeepers and inducing them to stock the goods.

In both cases, the effort of the salesmen contributes to the overall sales turnover of an organisation. The advertising effort and the sales effort are to a certain extent interrelated. The main function of advertising is generally before the actual selling occurs. The customer looks at advertisements and is thus induced to go to the shop or wait for the salesman and make his purchase. The salesman's job is to hand over the merchandise against exchange of money and provide satisfaction to the customer. Besides, he also some times has to provide after-sales service. In terms of selling, the role of a salesman can be sub-divided into several stages. These are:

1) Prospecting, i.e. trying to find out likely customers who are called Prospects.

2) Pre-approach, i.e. trying to find out more about the customers, before actually meeting them.

3) The Approach, i.e. when the-salesman actually communicates with the prospect with a view to sell the product.

4) The actual selling where he Answers Objections and Closes the sale.

5) In addition to this, he may also provide services such as giving technical Assistance, arranging credit facilities and expediting deliveries.

6) Collecting Information useful for the organization.

Tuesday, February 11, 2014

CHANNELS OF DISTRIBUTION

Channels of distribution can be grouped under two major headings: (i) Direct Selling by manufacturer and (ii) Indirect Selling through middlemen.

For direct selling, the first option involves supplying the product to the customer using your own salesmen and arranging your own deliveries. The second option is using the medium of post office. You obtain orders from your customers who respond by mail or telephone to your advertisements or to letters mailed directly to their houses. You deliver your products to them through mail or through some other carrier. The next alternative is to establish your own retail stores. Bata Ltd., for example, has established its own retail stores throughout the country. This practice has also been adopted on a smaller scale by a number of textile mills who have their own retail shops like Calico Mills, Raymonds, DCM etc., has franchised a number of retailers to sell their products to the consumers.

Figure-I : Alternative Channels of Distribution

Saturday, February 8, 2014

SALES FORECASTING

WHAT IS A SALES FORECAST?

A sales forecast predicts the value of sales over a period of time. It becomes the basis of marketing mix and sales planning.

A short-term sales forecast (say for a period of one year) when linked to the sales budget helps in the preparation of an overall budget for the firm as a whole. The short-term sales forecast in effect also provides the essential financial dimension to sales in terms of expected sales revenue and expenses required. Also, it helps in assessing the cash inflow and outflow needs and their sources.

A long-term sales forecast (say for a period of 5 years or so) on the other hand, focuses on capital budgeting needs and process of the firm. It provides for changing the marketing strategy of the firm, if needed, and includes reference to emerging product market needs, new market segments to be catered, review of distribution network and promotional programmes, organisation of sales force, and marketing set up. The long-term sales forecast triggers the task of aligning the production, procurement, financial and other functional needs of the firm with the finalised sales forecast.

HOW TO PREPARE A SALES FORECAST?

The preparation of a sales forecast requires (a) the availability of historical information on the product and industry sales, (b) identification of Product Sales Determinants, (c) prediction regarding the behaviour of market forces for the period under forecast, (d) use of appropriate techniques for forecasting, (e) judgement of executives preparing the sales forecast, and (f) the firm's market share objectives. These sales forecasting requirements are discussed below.

PRODUCT SALES DETERMINANTS

Product sales, generally speaking, depend upon the market need, price of the product, demand-supply situation, purchasing power available with the customers and their willingness to spend that on the purchase of the product. The importance of these factors varies according to the type of product sold i.e., consumer non-durable goods, consumer durable goods, and industrial goods. Let us now identify the major determinants of product sales relating to different types of goods.

Consumer Non-durable Goods

Three_,basic factors determine the sales of relatively low priced, short shelf life and frequently purchased consumer goods. These are: disposable personal income (personal income minus direct taxes and other deductions) of the customer; demographic characteristics (age, sex, occupation, urban/rural location, etc.) of the population, and the price level including competitive structure of the market.

Tuesday, February 4, 2014

PERSONAL SELLING

In contrast to advertising and publicity, which use impersonal methods of communication, personal selling makes use of direct personal communications to influence the target customers. Personal selling is a highly distinctive method of promotion, and makes use of oral presentation in conversation with existing and potential customers, for the purpose of making a sale.

ROLE OF PERSONAL SELLING

Personal selling, as the name implies, is an individual to individual selling. It, therefore, carries the distinctive advantage of flexibility in terms of tailoring the sales presentation to the needs of the buyer. Another unique advantage comes from its two-way communication, and human interaction thereby providing instant feedback. These two unique advantages make personal selling the most result-oriented promotion method.

Generally speaking, the nature of goods marketed, as well as the distribution system adopted, determine the role of personal selling in a firm. Therefore, personal selling is used extensively in the case of industrial goods, where the salesperson performs functions such as assisting the customer in designing the product specifications, product installation, product commissioning, solving technical problems through providing service after sales and helping customer to have optimal utilization of the product. In the case of consumer goods, on the other hand, the role of personal selling gets usually restricted to the dealer level. The scope of the tasks performed include obtaining periodic orders, ensuring supplies, offering tips to dealers on product display and attaining desired levels of stock movement. Similarly, the role played by personal selling is more in a firm which uses door-to-door selling method through its sales force than in the firm which sells through large stockiest, distributors or sole-selling agents.

Sunday, February 2, 2014

PROMOTION MIX

In our daily life we all are exposed to various tools of promotion aiming at communicating one thing or the other to us. To illustrate, while at home welcome across advertisements when reading a newspaper, watching TV, listening to radio or even examining the water, electricity or telephone_,bills. On our way to the office similar communications face us on bus panels, roadside hoardings, neon sighs, posters and banners etc. And, while at a retail shop these take the shape of traffic builders, product displays, streamers, hangers, bins etc., all sharing information relating to a specific product of a company.

Listed above are just a few types of the various promotion tools available to a marketer. Before proceeding further, let us take a look at the definitions of the four major methods of promotion. These are: advertising, personal selling, sales promotion and publicity. The committee on Definitions of the American Marketing Association defined these components as under:

Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. It includes the use of such media as magazines, newspapers, outdoor posters, direct mail novelties, radio, television, bus posters, catalogues, directories, programmes, circulars and very recently online ads and social media ads.

Personal selling: Oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales.

Sales promotion: Those marketing activities-other than personal selling, advertising, and publicity-that stimulate consumer purchasing and dealer effectiveness such as displays, shows and exhibitions, demonstrations, coupons, contests, and other non-routine selling efforts. These are usually short-term activities.

Publicity: Non-personal stimulation of demand for a product, service or business unit by generating commercially significant news about it in published media or obtaining favourable presentation of it on radio, television or stage. Unlike advertising, this form of promotion is not paid for by the sponsor.

Saturday, February 1, 2014

MARKETING COMMUNICATIONS

HOW COMMUNICATION WORKS?

We know by now that communication, simply speaking, is sharing of information between the two parties. Such an exchange could be oral or written, personal or public using words, figures, symbols or a combination thereof. The process of communication begins when one party (called source, sender or communicator) wishes to communicate with another party (the receiver). Communication is complete when the receiver understands in the same sense what the sender wished to communicate. The various elements of a typical communication process are given in Figure I.

Figure I: Elements of the Communication Process

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