Marketing Finance

Marketing: .the system of value exchange by Kotler the process of discovering and translating consumer need and wants into product and service specifications creating demand for those product & services and then in turn expanding their demand Housen. All those functions which are necessary to transfer the ownership of goods & services to the customers so as to satisfy their needs and objectives of organisations are achieved contnd

Finance: money, funds, capital, a resource to run and organisation A resource used to acquire other resources for operation of business. Marketing & Finance Independent or interdependent? ,

Cost: amount (money) that has to be paid/given up in order to get something. Paid or required to in payment for a purchase
Classification of costs: Based on nature: Fixed/Variable, Direct/Indirect. Based on elements: Material/Labor/overheads Based on stages: Prime/factory/total/cost of sales/cost of goods sold.

Revenue: what organisation earns by selling its products & services Total amount received by and company for goods sold/services provided during certain period Income generated from sale of goods/services (through operation) before costs/expenses are deducted. Sales Revenue: Income received through sale of goods/services Types: Gross Revenue/Net revenue

Investment: putting money into something with the expectation of gain, through analysis, has a high degree of security for the principal amount as well as the security of return with in an expected period of time. Putting money into something with the expectation of gain without analysis, without guaranty of security of principal & return? Putting money into something expecting gain, through analysis but no guarantee of return?

ROI: Return On Investment, measure to evaluate the efficiency of an investment or basis to compare efficiency of number of different investments. Ratio of money gained/to the amount of money invested ROI=(gain from investment-cost of investment)/cost of investment

Management of Sales Revenue

Application of disciplined analysis that predicts consumer behavior at the micro-market level and optimize product availability and price to maximize revenue growth. The primary aim is selling the right product to the right customer at the right time and for the right price. Finding answers to the questions like what to sell, when to sell, to whom to sell and how much to sell Involves data mining and operations research with a strategy understanding customer behavior and partnering with sales force Contnd

Management of sales revenue can be done by: Pricing: anticipating the value created for customers and setting specific price. Pricing based on market conditions and demand Inventory: overbooking in order to maximise revenue from full capacity eg hotels, railways Marketing: sell higher volumes by temporarily decreasing the price. Creating balance between volume growth & profitability Channels: strategy through different distribution channels. Different channels represent customers with different price sensitive. Eg pricing online & pricing at physical store

Analysis of sales Revenue by: Products: multi product organisations. product mix, product line Territories: huge geographical area, different markets, rural, urban Channels: direct selling (personnel) , intermediaries Customer order: small, large quantity

Analysis of Marketing Costs: Cost analysis involves such activities as estimating, cost control, cost forecasting and risk analysis. Cost analysis is made on the basis of cost data from cost & financial accounting. Why? Cost determination of each product, cost control, relative profitability, different sales price. Engineered costs: those costs having direct linkage to out put like material cost. Engineered costs relate with cost estimation, cost control, business planning & management, profitability analysis and project management. Capacity: capacity of marketing new product/new product development Fixed & marginal costs: marginal cost, any additional cost required to produce next unit.

Classification of marketing costs by function: Direct selling costs Market research Advertising Sales promotion Packaging Distribution warehousing Transportation Credit and collection, bad debts, discount etc Financial & general administration

Marketing Cost Allocation

Marketing cost allocation can be on various basis: assignment of indirect expenses on certain basis, apportionment, distribution of indirect expenses among various units Number of units sold Sales value/sales turnover Number of sales personnel Number of orders

Limitations in marketing cost allocation

Lease out or sell: industrial equipments with high price some time outright purchase or lease eg building construction machines Introduction of new products: add on new product, entirely new product. Adding to product line Dropping a product/ product line: Research & development costs: General administration costs: