NAME: - ANUPKUMAR JOGIBHAI PATEL

ADMISSION NUMBER: - 1412071 DATE: - 07/08/2020

MARKETING OF SERVICES
ASSIGNMENT

SECTION-A

1.  What are the challenges in managing services because of its perishability characteristic?
Ans :- Services cannot be inventoried, resold or returned unlike products which can be stored and sold, and if necessary be
returned, at a later period. This makes demand and supply forecasting an important task for service providers. If customers
are dissatisfied by the performance or quality of a product, there is an option of returning it to the company and get either
the value of the product (money back) or a new product. However poor service cannot be returned to the seller by the
customer. The inability to inventory services means that it is important for the services provider undertake accurate demand
and supply management, and also develop strong service recovery strategies if it goes wrong or the customer is dissatisfied.
In the airline industry, we can see clearly how heterogeneity, inseparability and perishability are the characteristics that affect
customer relations the most.

2. What is the significance of classifying services on the basis of tangibility? 

Ans:- It is defined in form of reliability, responsiveness, empathy and assurance all of which are in control of employee’s
direction interacting with customers. For service, customer’s satisfaction and delight are very important. Employees directly
interacting with customers are to be very special and important. People include internal marketing, external marketing and
interactive marketing.
Classifications of Services
In order to be able to make a clear and relevant classification of services, we would first need to understand the concept of
the word itself. Services usually refer to processes and not physical products. To understand more, read this article on
difference between goods and services. Some services may include people whereas other services (like online services) may
including objects which are managed by people.
Examples of services which include people can be a hair salon, education, theater, restaurants, and public transportation. On
the other hand services that include objects include repairs and maintenance, dry cleaning, banking, legal services, insurance,
etc.
Classification of service based on Tangible Action

Wherever people or products are involved directly, the service classification can be done based on tangibility.
(i) Services for people: Like Health care, restaurants and saloons, where the service is delivered by people to people.
(ii) Services for goods: Like transportation, repair and maintenance and others. Where services are given by people for
objects or goods.
3. Why is service quality difficult to evaluate? Explain the ServQual model of service quality?
Ans:- There are many types of questions that can be asked in a Service Quality Questionnaire. They should focus on the
customer’s interaction with the customer service rep (positive and negative), the service and experience overall, and if the
customer would use your service again. It’s also good to have a couple open text questions so your customers can write in
their own feedback.

Sample questions include:

 The service rep was helpful (strongly agree to strongly disagree)

 Which of the qualities about the service did you like (include a list patient, friendly, attentive, willing to help,
empathetic, etc)
 Was there anything about our service that stood out to you? (open-text response)
 Over the next 12 months, how likely are you to use our product or service again (strongly agree to strongly disagree)
Industry examples
As mentioned before, measuring service quality depends entirely on the context and brand promise, and that varies by
industry. To understand if you’re providing good service, you must know exactly what your customers are looking for in terms
of service quality.
Below are examples of how service quality is measured in different industries.
Restaurants
In restaurants, service quality tends to focus on timely service (not too rushed or too slow), server attentiveness, and
friendliness.
In fine dining restaurants with a fairly engaging experience, an expected part of service quality is the ability to make relevant
recommendations. This can be easily measured by a manager asking the customer questions at the end of the meal, such as
“how satisfied were you with the server's recommendations?”  The manager can also ask if the order placed was influenced
by the recommendation(s).
However, this is clearly not a measure that would be relevant in a quick-service restaurant, showing the importance of
context. In quick-service restaurants, things like order accuracy and speed of delivery are more accurate measurements. To
gather this data, you can put a link to a survey on a receipt and giveaway a free menu item upon completion.
Automotive
Service quality is especially important in automotive because the customer’s car must be fixed and completed on time. This is
mostly focused on the service itself, and less about the interactions with the technician or front desk attendant, except when
it comes to trust (because they must trust the professionals' recommendations).
You can ask questions like “how would you rate the quality of the service you received” or “is your car now running like you
expected after it was serviced?” You can also ask an NPS question like, “how likely are you to recommend our service to a
friend or colleague?”
Retail
In retail, you typically ask things about staff product knowledge (think Adidas and knowing what type of running shoe best
suits your use) and recommendations.  You can also assess merchandise knowledge (what goes with what), friendliness, and
availability (were team members on the shop floor easy to engage).
While there are all very straightforward questions to ask, they can be conditional based on the text comments or score
provided on that element.
These questions help to identify both the frequency with which it happens and the customer's satisfaction with the
experience.
You can then regress that against the outcome measure and see how big an impact that makes on the overall experience. 
This provides direction on what to focus on in your store (or restaurant), and what action you should take. For example, if
shoe recommendations are a significant part of the experience and guests are not satisfied - you can provide better
merchandise training, and if they are knowledgeable but not making relevant suggestions, retrain to better read guests'
interests.
SERVQUAL
SERVQUAL is based on a set of five dimensions which have been consistently ranked by customers to be most important for
service quality, regardless of service industry. These dimensions defined by the SERVQUAL measurement instrument are as
follows:
Tangibles: appearance of physical facilities, equipment, personnel, and communication materials.
Reliability: ability to perform the promised service dependably and accurately.
Responsiveness: willingness to help customers and provide prompt service.
Assurance: knowledge and courtesy of employees and their ability to convey trust and confidence.
Empathy: the caring, individualized attention the firm provides its customers.
These five SERVQUAL dimensions are used to measure the gap between customers’ expectations for excellence and their
perception of the actual service delivered. The SERVQUAL instrument, when applied over time, can help you understand both
customer expectations, perceptions of specific services, and areas of needed quality improvements.
SERVQUAL has been used in many ways, such as identifying specific service elements that need improvement, and targeting
training opportunities for service staff.
Proper development of items used in the SERVQUAL instrument provides rich item-level information that leads to practical
implications for a service manager.
The service quality dimensions evaluated by SERVQUAL should be adjusted for optimal performance in different industries,
including public and private sector applications.
SERVQUAL scores are highly reliable, but when used in different industries may fail to produce a clear delineation of the five
basic dimensions. Other measures, such as the Six Sigma model should be considered for applicability in quantifying the gap
between service expectations and perceptions.

4. What is a service style? Why it is important deliverable to enhance sales?

Ans:- One important decision to make when starting a restaurant is the service style of the establishment. The service
style determines the layout, menu, inventory, food prices and décor of the restaurant. The service style of a restaurant
depends on your personal preferences, target market and location.
Food service has a number of different styles of service. Style of service should be selected based on the type of food being
served. There are various methods in which the service of the food can be done on the guest table. The two most popular
food service styles are ‘Pre – plated service’ and ‘Silver service.’ Read on the various styles of food services and become a pro!
1. Silver Service/Platter to Plate/English Service
This involves the presentation and service of food to the guest by the restaurant staff from the food platter or dish to the
guest plate, with the help of a service gear. Always done from the left-hand side of the guest. Professional silver service is all
about mastering the technique of using service gear held in the right hand to transfer items to the guest plate from a service
dish held in the left hand.
2. Pre-Plated Service/American Service
A service of pre-plated food to the guest by the restaurant staff carried out from the right-hand side of the guest. This
demands the service staff to be skilled in carrying plates without disturbing the food arranged on them. Usually involves
carrying two or three plates in the left hand and no more than four plates in the right hand at a time. Usually practised in
coffee shops or restaurants serving Western cuisine.
3. Family Service/French Service
A very simple method of service in which the serving dishes are presented to the guests and placed on the dining table,
allowing the guest to select and serve himself. Such service is usually found in restaurants serving Indian cuisine.
4. Buffet Service
A huge presentation of food items, hot and cold, different cuisines. The service staff positions itself behind the buffet and
assists the guests by plating their food for them as they select it, using the silver service technique.
5. Gueridon Service
The term ‘Gueridon’ means a trolley used for the preparation or finishing of food. A trolley is used to cook various
ingredients, involving a lot of showmanship such as flambé, carving etc. Done next to the guest table. Can either be an
elaborate piece of moveable furniture or a simple dining table.
After a deliverable is created, it flows through the processes of Perform Quality Control and Verifies Scope until it meets
specifications for completeness and correctness.
In the Perform Quality Control process, the deliverables are inspected, measured, and tested to make sure everything that is
produced meets the quality standards.
In the Verify Scope process, the deliverables are compared with the documented scope to ensure that everything was
completed. This comparison may be performed several times in the life of the project. Formal written acceptance of
deliverables by the appropriate stakeholders is an output of the Verify Scope process.
Thus, a deliverable is any product, service, or result required to complete a project. A work breakdown structure is based on
these deliverables. Usually, deliverables are categorized into two types, i.e., internal deliverables and external deliverables.

5. How do presentation skills affect services marketing?

Ans:- The quality of your sales presentation will often determine whether a prospect buys from you or one of your
competitors. However, experience has taught me that most presentations lack pizzazz and are seldom compelling enough to
motivate the other person to make a buying decision. Here are seven strategies that will help you create a presentation that
will differentiate you from your competition.
1. Make the presentation relevant to your prospect. One of the most common mistakes people make when discussing their
product or service is to use a generic presentation. They say the same thing in every presentation and hope that something in
their presentation will appeal to the prospective customer. I have been victim to this approach more times than I care to
remember having been subjected to many “canned" PowerPoint presentations.
The discussion of your product or service must be adapted to each person; modify it to include specific points that are unique
to that particular customer. If you use PowerPoint, place the company’s logo on your slides and describe how the key slides
relate to their situation. Show exactly how your product or service solves their specific problem. This means that it is critical
to ask your prospect probing questions before you start talking about your company.
2. Create a connection between your product/service and the prospect. In a presentation to a prospective client, I prepared a
sample of the product they would eventually use in their program. After a preliminary discussion, I handed my prospect the
item his team would be using on a daily basis – instead of telling him about the item I placed it in his hands.
He could then see exactly what the finished product would look like and was able to examine it in detail. He was able to ask
questions and see how his team would use it in their environment.
Also, remember to discuss the benefits of your products, not the features. Tell your customer what they will get by using your
product versus your competitors.
3. Get to the point. Today’s business people are far too busy to listen to long-winded discussions. Know what your key points
are and learn how to make them quickly. I remember talking to a sales person who rambled at great length about his
product. After viewing his product and learning how much it would cost I was prepared to move ahead with my purchase.
Unfortunately, he continued talking and he almost talked himself out of the sale. Make sure you know what key points you
want to discuss and practice verbalizing them before you meet with your prospect.
4. Be animated. The majority of sales presentations I have heard have been boring and unimaginative. If you really want to
stand out from the crowd make sure you demonstrate enthusiasm and energy. Use voice more effectively and vary your
modulation. A common mistake made when people talk about a product with which they are very familiar is to speak in a
monotone voice. This causes the other person to quickly lose interest in your presentation. I recommend using a voice
recorder to tape your presentation. This will allow you to hear exactly what you sound like as you discuss your product. I must
profess to being completely humiliated when I first used this tactic. As a professional speaker, I thought all my presentations
were interesting and dynamic – I soon learned that my stand-up delivery skills were much better than my telephone
presentation skills.
5. Use showmanship. In the book, The Sales Advantage, an example is given how a vending sales person lays a heavy sheet of
paper on the floor and asks his prospect, “If I could show you how that space could make you some money, would you be
interested?" Consider the impact of this approach compared to the typical approach of saying something like, “We can help
you make more money." What can you do to incorporate some form of showmanship into your presentation?
6. Use a physical demonstration. A friend of mine sells sales training and he often uses the whiteboard or flipchart in the
prospect’s boardroom during his presentation. Instead of telling his client what he will do, he stands up and delivers a short
presentation. He writes down facts and figures, draws pictures, and records certain comments and statements from the
discussion. This approach never fails to help his prospect make a decision.
7. Lastly, believe in your product/service. Without doubt, this is the most critical component of any presentation. When you
discuss solutions, do you become more animated and energetic? Does your voice display excitement? Does your body
language exhibit your enthusiasm? If not, you need to change your approach. After all, if you can’t get excited about your
product, how can you expect your customer to become motivated enough to buy?

6. What is the importance of the ‘Referral marketing’ in services in increasing of sales?

Ans:- Improved customer retention rate: Customers who participate in referral programs are much more likely to stay with
your company. Because engaging new consumers is generally more expensive than retaining your current customers, this is
often among the top benefits of referral marketing.
Benefits Of Referral Marketing
Customers trust referrals: Perhaps the most compelling benefit of referral marketing is that customers trust referrals. Recent
consumer polls indicate that recommendations and reviews are trusted more than conventional advertisements. Meanwhile,
people are four times more likely to buy when referred by a friend.
Improved customer retention rate: Customers who participate in referral programs are much more likely to stay with your
company. Because engaging new consumers is generally more expensive than retaining your current customers, this is often
among the top benefits of referral marketing.
Increased marketing reach: Referral marketing allows you to increase your outreach by using your customers as your
company’s advocates.  While there are venues and occasions that are simply off-limits to traditional advertisements, there
are virtually no limits to your customer telling a friend or coworker about a good product or company. Because many people
have a diverse circle of friends, customer referrals will also allow you to expand your client base.
Referred customers are more valuable: Referred customers already have a positive opinion of your company because
they’ve been referred by a peer.  Customers that have been referred by a friend, family member or colleague have a lifetime
value that is, on average, 25% higher than that of other customers.
Valuable data: The modern consumer loves a personalized experience.  By tracking consumer referrals and engagement, you
can give your customers the benefit of personalization. This also gives you a good idea of general market trends that can help
your brand become better at meeting customer needs.
Great ROI value: While discounts and gifts will have a small cost to your company, referral marketing is a cost-effective way
to advertise when compared to other modes such as traditional online ads. You can save even more by streamlining your
referral marketing system rewards into your general loyalty rewards program, which will allow you to award points rather
than an immediate gift or discount per referral.
Save on new loyal customers: Compared to other forms of marketing and loyalty retention, referral marketing is a cost-
effective way to gain new and loyal customers. Because people are social creatures, individuals that are referred to your
company are much more likely to remain loyal customers.
Automation: Once you’ve set up a good referral marketing platform, you can pretty much sit back and enjoy the benefits.
While you will need to take several steps at the beginning, such as allotting rewards points and setting up your referral
marketing promotion program, most of the work is done by your customers.
Increased engagement: Increasing engagement strengthens your online presence and increases the chances of potential
revenue. A customer who refers a friend is likely to visit your website more frequently to either claim rewards or even just
discuss a product with others. The more often a customer returns to your site, the more items they tend to purchase.
Identify and target your most loyal customers: Customers love feeling appreciated. Meanwhile, 68% of customers tend to
leave because of perceived brand indifference. Referral marketing platforms allow you to track and target your most loyal
customers for rewards and provide a more personalized interaction experience.
Increase brand awareness and reputation: Referral marketing can help customers get to know your brand story and improve
your overall reputation. Many modern consumers want to align themselves with brands that have a strong voice and a
positive influence. 85% of consumers agree that they prefer a more authentic, honest brand. Allowing your own customers to
tell your story makes that story through referrals resonate more strongly in the general consumer market.   
Customization and tweaking options: Modern referral platforms tend to be very user-friendly and easy to modify. If
something isn’t working out, or if you want to experiment with a new trend, you can make the change with minimal hassle.
Social media boost: Social media has become an incredibly important advertising tool in reaching the newest generations of
consumers. Because most referral marketing platforms also allow customers to refer friends via their favorite social media
site, your brand will get an additional boost in social media presence.
Easy progress tracking: You can view user engagement and get an idea of referral success with regular progress tracking
reports. An occasional glance at the reports will help ensure that you are making the best use of your customer referral
strategy.

7. What is the importance of Relationship marketing in services? 

Ans:- Relationship marketing is important for its ability to stay in close contact with customers. By understanding how
customers use a brand's products and services and observing additional unmet needs, brands can create new features and
offerings to meet those needs, further strengthening the relationship.
First and foremost, relationship marketing is important because it helps you not only get new customers, but keep them once
you have them. Why? Because you're building a better experience for them as they engage with your business.
Here are some other benefits of a successful relationship marketing strategy:
Enhanced Customer Experience
Most people leave their current brand because of poor customer service. Relationship marketing, whether through providing
superior customer service or simply listening and responding to feedback on social media, leaves a good taste in customers'
mouths.
Better Feedback
Plenty of brands are getting the hint, thanks to social media: feedback (thoughts or reactions to a product or service) can
make or break a business. Today, you can engage with a brand on social media and, if they care about relationship marketing,
they'll reply. This gives customers an opportunity to be heard, and provides valuable feedback for brands in areas that might
need to be tweaked.
More Sales
Whether it's keeping a customer happy, or gaining referrals (new customers directed to your brand from an existing
customer), good relationship building ultimately will result in more revenue for your company. Customers who are happy
with your business will reward you with their hard-earned money and will tell their family and friends about you.
Innovative Opportunities
Starbucks is a great example of relationship marketing that benefits their innovations. Through a portion of their website
called ''My Starbucks Idea,'' customers can submit their own ideas for new drinks and other business opportunities. In this
community, members can vote on the best ideas and share their own thoughts. This not only strengthens the relationship
that Starbucks has with its patrons, but allows them to listen in and develop consumers' ideas (a bonus point in the
relationship marketing concept).

Increase in Sales Volume: Enhanced customer experience means an easy upselling and cross-selling of goods or services to
satisfied customers. This ultimately increases sales volume.
Low Advertisement Cost: A successful relationship marketing reduces the efforts on customer acquisition since it helps in
retaining customers for long-term. Thus, decreasing the advertisement cost.
High-Profit Better Price: A satisfied customer tends to bargain less for the prices and is ready to pay a fair price for the goods
or services. This increases the profit margin of the seller.
Creates Brand Image: A happy customer will promote the product or service among their peers, relatives and the known
ones. This word of mouth creates a strong brand image of the organization.
Customer Retention: Customer acquisition is not everything; meeting the customer needs, creating value for the customers
and making them buy again and again is essential. All this is possible through customer relationship marketing.
Gain a Competitive Edge: A loyal customer feels comfortable buying goods or services from one single store rather than
shopping around at various places. This is an advantage for the organization over its competitors.
 SECTION-B

8. To what extent do you think the positioning influences your perception of service quality and, ultimately,
your buying decisions?

Ans:- research and have pinpointed your customers’ needs, but just how much do you know about what’s driving their
decision making – and more importantly, how can you influence those decisions?
With consumers becoming increasingly savvy about their investment in brands, it's more important than ever for businesses
to develop a scrupulous understanding of their audience and its needs.
From identifying pain points to delivering a solution, marketers should be used to executing consistent, targeted
campaigns to ensure effective results. This requires a deeper knowledge of, and empathy with, the brand’s target market.

But what are the driving forces behind each action a customer takes?

We take a closer look at the factors that influence consumer behaviour and how they should influence your promotional
marketing strategy.
FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR

There are four key factors that influence consumer buying behaviour:
Psychological
Personal
Social
Cultural
You can’t control psychological, personal, social and cultural factors. However, you can tap into and exploit the influence each
factor has on consumers, to transform your campaign and motivate behaviour.

In developing an in-depth understanding of how these key characteristics can impact on consumer behaviour – specifically
that of your target audience – brands will gain an advantage over competitors.

So, let’s explore how your promotional marketing campaign can utilise this knowledge to deliver a successful campaign and
influence the behaviour of consumers.
1. PSYCHOLOGICAL
From the motivations of your consumers to their perception of your brand, psychological influences affect consumers
throughout their buying journey – specifically their final purchase decision.

Motivation is the driving force behind purchasing decisions as consumers are actively seeking to satisfy their needs. It
encourages impulse buys, ongoing interaction with your brand and makes them more likely to want to learn more about you.

Consumers don't come in one shape and size. Neither should your market intelligence. Have no fear, our consumer insights
report has landed, and not only is it jam-packed with invaluable, actionable information to drive your promotions, but it's
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HOW DO YOU DRIVE MOTIVATION?
Reinforcing the consumer’s need across your promotional activity will ignite their desire to find a solution, and thus supply
you with the perfect opportunity to provide one.

Yet before your promotion evokes a valuable reaction from your audience, i.e. engagement with the campaign and your
brand, you first need to identify the nature of their need…

Take a step back and look at your overall marketing campaign:

How does your product or service aim to fulfil a functional or social need?
How are you solving problems with basic and practical solutions?
How are you going further to improve the consumer’s sense of belonging?
Pinpointing the answers to these questions will offer insights into how you can best steer your audience to engage with you
and to making those all-important buying decisions that boost brand and business.
CAMPAIGN TIPS FOR FUNCTIONAL NEEDS
It's important to remember that individuals with functional needs tend to look for the product or service that provides the
most value. This means consumers will be more responsive to campaigns that include mechanics such as BOGOF promotions,
which provide them with an opportunity to save money and/or add value to their purchase.

The key word here is value.

Even if you sell high investment products, like washing machines or TVs, you can still implement promotional campaign
mechanics to attract and influence customers with functional needs.

Instant wins or cash back promotions are a simple and effective way to bring seriously irresistible value to your product
and beat the competition.

For example, throwing in a free Blu-ray player or 3 months free media streaming for lucky winners who buy your TV is
relevant to the buyer. It offers great value, and gives you leverage over the next step in their journey.
CAMPAIGN TIPS FOR SOCIAL NEEDS
Those with social needs are far more in tune with promotions that satisfy their need to belong. Consumers that fall into this
category are far more likely to invest in brands that exhibit identity and ideals that closely resemble their own.

Aligning your brand with a trend or event, that’s relevant to your target audience, is a tried and tested approach to targeting
a market with social needs.

Partnering up with an event or practicing ambush marketing would be a great way to influence the actions of buyers with
social needs, as it fulfils their intense emotional drive for ‘belongingness’ (Baumeister and Leary) within a favourable social
environment.

It could be a travel trend, the latest lifestyle hype, or a global gathering with synergies to your brand. Either way,
piggybacking socially relevant events will influence your buyer’s behaviour and boost the visibility of your business in front of
a relevant, widespread audience.

Perception influences an individual’s selection, organisation and interpretation of the information they receive from a brand.

Each person will react differently to your promotional marketing campaign. So first impressions are vital. Be sure to research
and refine the initial stage of your campaign for optimum engagement levels.
HOW DO YOU ENHANCE PERCEPTION?
To ensure your target audience choose to engage with your promotion, implement the following tactics:
Consumers are attracted by new or unexpected stimuli. Whether you deliver something completely different to
your competitors or apply a unique twist to your brand’s usual marketing activities, deliver the ‘wow factor’ with a creative,
innovative campaign.
Utilise different touchpoints. TV, radio, online, or in-store – it’s virtually impossible to get away from advertising in today’s
world. No wonder consumers find it difficult to retain all the information they are exposed to each day. Introducing several
touch points to your promotion gives you the opportunity to be consistently present in the consumer’s mind, thus making
interaction more likely.
Build a positive brand image. Consumers are influenced by how they and their peers perceive and position your business.
Designing a campaign that appeals to the likes and interests of your audience will present your brand in a positive light.
For example, if your audience is interested in health and nutrition, go further than offering them a free hamper of nutritional
goodies – instead, give them the chance to win a weekend away to a health and spa resort, with nutritional cooking classes
included!
2. PERSONAL

From lifestyle to personality, personal influences change and grow alongside the consumer’s situation, and have a
noteworthy impact on the preferences of individuals. 
The lifestyle of a consumer comes with idiosyncrasies such as activities, interests and opinions which, though ambiguous at
times, can prove significant in buying decisions.
HOW DO YOU ALIGN WITH LIFESTYLE?
Incorporating lifestyle factors into your promotion will influence consumer behaviour. Find synergies between your brand
and their interests to strengthen your relevance and encourage engagement and loyalty.

If your consumer base is dominated by young families, offering the chance to win a brand new sports car might not be as
relevant as an adventure holiday, cash prize, or cinema tickets. 
Understanding your audience’s current situation and creating a link between your brand and their lifestyle, will result in an
impactful campaign that resonates and generates meaningful appeal.
When targeting the personalities of consumers, brands should develop their own personality – one that mirrors the values of
their audience. This requires an emotional understanding of consumer characteristics and traits.
Are they innovative?
Are they curious?
Do they socialise often?
Do they have ambitions?
HOW DO YOU DEVELOP EMOTIONAL UNDERSTANDING?

If you’re targeting the right audience you’re probably practicing this behaviour already. Remaining relevant to your target
audience is a crucial aspect of all marketing activity. Consumers look to brands who resemble and align with their own
aspirations.
Design a promotion that assists consumers in reaching their ideal self to encourage engagement and improve the perception
they have of your brand. If your target audience has an innovative streak, then using similar mechanics in your promotion will
resonate well with them.
The use of gamification gives your brand the opportunity to be unique, and attracts creative consumers, whereas an in-store
BOGOF offer might not generate as much of a buzz and could devalue your brand.
Why not ask customers to scan a barcode into a bespoke app or enter a code on your website? You could even promote
interactivity with a trivia question about your brand or industry for the chance to win the prize. Incorporating a fun,
innovative mechanic into the promotion, will encourage consumers to engage with your brand and you’ll attract the right
kind of audience, rather than serial ‘gamers.’
3. SOCIAL
Social factors refer to the external biases which typically impose influence on consumer purchase decisions. Peer and
reference groups and social status, all fall within this classification.
Reference groups are the people around an individual that influence their behaviour in some way. So understanding the
group of people that influence your target consumer can be an integral stage of your promotion.
HOW DO YOU CREATE SOCIAL INFLUENCE?
Within each group there is typically an initiator, an influencer, a decision-maker and the buyer. For brands to effectively grab
the attention of the buyer, they should target the initiator or influencers. This way, you establish a role in changing the buying
behaviour of reference groups.
Building relationships and creating partnerships with leaders, such as celebrities or industry professionals, will position your
brand as relevant. For this strategy to be effective, ensure there are clear synergies between the influencer and the brand, as
well as the influencer and the consumer.
Think carefully about involving celebrities, as it could impact your campaign budget. You may want to approach this as you
would an ambush marketing campaign – with a quick burst of captivating, purposeful activity that doesn’t cost the world, but
lives long in the memory.
Social status is a significant influence on buyer behaviour, especially consumer loyalty and preference to brands. The brands
that consumers associate themselves with tend to reflect them as an individual in that they share similar values or traits.
HOW DO YOU EXPLOIT SOCIAL STATUS?
You need to identify what your target audience is trying to portray socially, to help design a campaign that is going to be
more appealing to them. By mirroring your consumers’ social position you encourage them to share and promote your
campaign with their friends, family and community.
Social status influences every consumer. While CEOs might be interested in winning a luxury, all expenses paid holiday to
reflect their social success, interns could be more interested in promotions that offer up and coming, trendy prizes such as
free tickets to live events or experience days.
4. CULTURAL
Cultural factors include social class and subculture – factors which have a significant influence over the values and decision
process of consumers. Whether it's their family, friends or environment, an individual’s cultural surroundings play an
important role in their buying behaviour.
Each market will have different cultural preferences. So it is important that you have a breadth of knowledge on your
markets’ and the impact this has on their opinions and behaviours. This will help you adapt a marketing strategy, or
specific promotional campaign, to meet and exceed expectations of consumers.
Consider the social class of your consumer – do they have money to spare or are they focused on finding the best price? In
general, all of today’s consumers are savvy, but understanding their social position will help cater a campaign to their needs.
HOW DO YOU INTERPRET CULTURE?
Those with a lower income might prefer BOGOF product promotions. However, other social demographics could be more
attracted to campaigns that offer additional features or social benefits, such as free cinema tickets to the latest 4DX screening
of their favourite film. Consumer buying behaviour is ultimately shaped by the desire to conform and fit in with the latest
cultural movements.
HOW DO YOU BECOME CULTURALLY RELEVANT?
Position your brand as a cultural role model
While social trends are important, they can often be short lived and somewhat fad-like. Cultural trends, however, tend to be
more deep-rooted.
Familiarise yourself with the subculture which is defining your target audience. From music and vocabulary, to the way in
which you communicate your campaign, keep every aspect of your campaign relatable to influence consumers.
Ensure you have a clear understanding before drawing upon a culture for influence to avoid any faux pas. Who are your
audience? What do they want? Where do they hang out, and what do they respond to?
Having access to this information gives you a solid platform from which you can create an effective, targeted campaign. Focus
on introducing several diverse touch points to promote your campaign and ensure visibility across different platforms to
improve reach.
If you’re running an in-store product promotion, consider how you can make consumers aware of it before they see it in store
– whether it is social media, email marketing or a TV advert.
For example – if you’re targeting the younger generations – creating a Snapchat filter to go alongside your brand and
promotion is a great way to get in front of your target audience. With 72% of millennials using Snapchat in 2016 (Business
Insider), this presents a genuine opportunity to improve the relevance of your promotion and encourage social sharing.
Stay relevant with your consumers by downloading our free consumer insights report, available by clicking below...
Make it innovative but be sure to stay relevant
While Snapchat might be the perfect platform to attract and interact with young audiences, if you’re targeting 55+ year olds,
you might be faced with a very different outcome.
Yes, social media can be considered a fully integrated part of today’s society, but culture cannot be generalised. Don’t assume
that just because something is popular that everyone will get on board.
Understanding your audience and identifying their cultural influences, will help drive innovation behind your campaigns. If
data shows that consumers visit your site or make purchases via their mobile, then incorporate a mobile specific element into
your promotion to influence the buying behaviour of your consumers.
GET TO KNOW YOUR AUDIENCE
Each of these factors highlight the multiple ways you can influence buying behaviours. Ultimately it comes down to the level
of understanding you have about your consumer and how you adapt your campaign in line with this knowledge.
The more you know about your audience, the more relevance you can add to your promotional marketing campaign, thus
ensuring you intensely appeal to your target customers.
Designing a campaign that utilises the psychological, personal, social and cultural influences of your key consumers will
undoubtedly enhance your promotion and inspire positive consumer behaviour.

9.  What is the importance of various distribution channel options available to Travel & Tourism services
marketers?
Ans:- Sales promotion techniques are good marketing tools to increase short-term sales and create brand awareness. As
awareness about spas is very less among the people of Hyderabad and awareness about Charms Spa is even lesser, sales
promotion techniques are the right tool to draw customers and create awareness about Charms Spa services. The following
are some of the sales promotion techniques that are best suited for Charms Spa. Sampling: Offering free samples is a popular
sales promotion technique.
Sampling enables customers to evaluate the service and decide on its benefits and costs. It also makes the customers aware
about the services that a service provider is offering. Charms Spa may offer sample offers like free 5kg weight loss program or
oil massage for a limited period. Prize promotions: Another sales promotion technique that Charms can use is prize
promotions. It may run contests that encourage customers to participate, thereby creating brand awareness regarding its
services.
Prize promotions also enable a company to gather information about potential customers. Charms can run contests related
to health and offer free services or gift vouchers at its Spa for the winners.
Price/Quantity promotions: Charms can also offer price promotions like discounted price, to the customers residing within
the vicinity of the Spa or offer two or more services at a special price.
Coupons: Coupons are another popular sales promotion technique that can create brand awareness. Charms can offer
coupons that contain free service offer or specific discounts on services. It can distribute the coupons either directly to the
customers or as a special insert in newspapers or at shopping malls and super markets.

10. What is the role of promotion and advertising in services? Is promotion more useful or media advertising?
Comment.

Ans:- Adverting is only one element of the promotion mix, but it often considered prominent in the overall marketing mix
design. Its high visibility and pervasiveness made it as an important social and encomia topic in Indian society. Promotion may
be defined as “the co-ordination of all seller initiated efforts to set up channels of information and persuasion to facilitate the
scale of a good or service.” Promotion is most often intended to be a supporting component in a marketing mix. Promotion
decision must be integrated and co-ordinated with the rest of the marketing mix, particularly product/brand decisions, so
that it may effectively support an entire marketing mix strategy. The promotion mix consists of four basic elements. They
are:- 1. Advertising
2. Personal Selling
3. Sales Promotion, and
4. Publicity
1. Advertising is the dissemination of information by non-personal means through paid media where the source is the
sponsoring organization. 2. Personal selling is the dissemination of information by non-personal methods, like face-to-face,
contacts between audience and employees of the sponsoring organization. The source of information is the sponsoring
organization. 3. Sales promotion is the dissemination of information through a wide variety of activities other than personal
selling, advertising and publicity which stimulate consumer purchasing and dealer effectiveness. 4. Publicity is the
disseminating of information by personal or non-personal means and is not directly paid by the organization and the
organization is not the source.

Conclusion In order to measure the effectiveness of advertising, which approach (communication effectiveness or sales
effectiveness), is more suitable? Two factors are to be considered in deciding the approach. They are 1. Relevance of
advertising objectives on the overall performance objectives: Generally advertising managers would like to know the role of
advertisements on the overall performance of the business firm i.e., return on investment and on profitability. A sale is a
determining factor of company performance. 2. Difficulty and cost of obtaining data needed to evaluate effectiveness:
Generally communication measures are easy to follow than sales effectiveness measures. If the measures of advertising are
more relevant they will be difficult and costly. If it is less difficult and cheap the measures will not be more relevant.
Therefore, the advertising manager has to make a balance between these two approaches. Suitability In small business firms
where the marketing research resources are limited advertising managers may decide on less expensive and less relevant
measures. The big business house, which has more access to research, may decide on the more relevant and expensive
measures.

11. Explain the importance of pricing in service products ?

Ans:- Importance of Pricing – Helps in Determining Return, Determines Demand, Sales Volume and Market Share,
Countering Competition, Builds Product Image and A Tool of Sales Promotion. Pricing is an important decision making aspect
after the product is manufactured.
Pricing is a vital area in marketing. Price is one of the significant elements in the marketing mix. It is the sole and an important
element in the marketing mix of a firm that brings revenue to the business. Organizations should use a sophisticated
approach to pricing. While pricing the services, due regard should be given to shifts in demand, the rate at which supply can
be expanded, prices of available substitutes, the price – volume relationship and the availability of future substitutes. Service
companies must understand how customers perceive prices of services.
1. Survival price: Survival price is only a short-run objective. A firm follows survival price policy when there is an intense
competition and changing consumption pattern in the target market. Generally, it is a low pricing objective to maintain
demand for the firm’s product. Many ready-made garment sellers dealing in foreign brands like Lee, Arrow, Peter England,
Van Heusen etc., have followed pricing below cost. So pricing below cost involves foregoing desired levels of profits to ensure
survival. Factors such as intense competition, changing consumer wants, critical cash conditions etc., force the service
provider to follow this objective.
2. Current profit maximization price: Profit maximization is the oldest objective of pricing. It is generally a long term
objective. It is the opposite to the survival price. The firm charges high price that will maximize current profit of the firm. This
pricing objective is set when a good demand exists for the services of the firm. Profit maximization pricing ensures
maximization of profitability over a given period. The period concerned may be related to the life cycle of the service.
3. Market share price: Price helps improve market share. Market share means that portion of industry’s sale which a
marketer wishes to retain Market share also represents. a sensitive indicator of customer as well as trade acceptance.
Maximization of market share is adopted by those firms which are able to realize economies of scale in distribution and
promotion. When a marketer attains a high market share in the market, he is able to enjoy lowest costs and highest long-
term profits. A market share leader charges a low price to maintain his market sharp.
4. Service quality leadership: A service company may use a pricing policy to prove its prestige. The high price charged
impresses the quality of the service. It also leads to price – quality leadership in the target market. Service offerings
positioned in high price category build a quality image for the service provider. High-priced restaurants and personal care
centres aim at achieving leadership in service and quality by setting ‘service quality’ price for their services.
Profit maximization cannot be the only objective of pricing. A multiplicity or mix of objectives is invariably involved. Firms
seek to meet a variety-of interests through price policy. Interests may vary from one firm to another. Accordingly, pricing
policy may vary. No firm is satisfied with a single objective in pricing.
1) Price in combination with promotion becomes a strong tool for influencing buyers to buy products. It interests the buyers
and highlights the image of the brand to increase sales. Sometimes organisations focus on other marketing mix elements by
keeping the price constant based on recovering costs at certain percentage.
2) Finalising price in combination with other marketing mix variables, sets guidelines and boundaries for management to set
marketing strategies.
3) Pricing also determines standard of living. The lower the prices in the economy, the higher is the purchasing power in the
hands of consumers. Price reflects purchasing power of the market.
4) Price is a strong weapon against competitors.
5) Price determines the profits on sales. It is a basis of generating profits. As it is the most flexible of the marketing mix
variables, organisations exercise this freedom very often for defensive or offensive pricing strategies.
6) Price influences two types of management decisions. First is setting price for a new product and second, adjusting the price
of existing products basis the market situation, costs, etc.
7) Depending on the marketing program, organisations use Price in different ways – Demand oriented strategy, cost oriented
strategy, competition oriented strategy, and also because of ethical constraints.
8) Price should be carefully set basis its combination with the other marketing mix variables. The price on a product affects
the market of another product in the product line from the same manufacturer. For example, a soap priced similar to another
soap from the same manufacturer which has different features will have impact on the sales of each other, and the customer
will have difficult time in making a choice. Price setting should be according to the product features and should accompany
strong promotional activities like discounts, education of product features, etc.
9) Price should be set in relation to the delivered value and perceived value of the product -Price also communicates the
quality of the product. If a product is priced very low and its features communicated are better than the competitor, the
customers may think that the product has low quality. In such cases organisations have to invest heavily in promotional
activities and communicate clearly highlighting the services associated like warranties, brand value, etc.

12. What role will perceptual mapping play in setting up a chain of schools in a busy cosmopolitan city?
Ans:-A perceptual map may sound like a piece of marketing jargon, but it could help you identify strengths, weaknesses and
opportunities for your school. The perceptual map is a commonly used piece of analysis to understand an
organisation’s positioning in relation to its main competitors. It might be used by retail firms for identifying a gap in a region
where a new store can be established, or by consumer goods production firms to spot an opportunity to launch a new
product.
A typical perceptual map might chart a range of products against two factors, so a chocolate maker might map price against
quality, or a car maker might chart sportiness against reliability.
The process of perception has three sub stages - 1. Sensation– Attending to an object/event with one of five senses 2.
Organisation – Categorising by matching sensed stimulus with similar object in memory, .g. colour 3. Interpretation–
Attaching meaning to stimulus, making judgments as to value and liking, e.g. bitter taste People can emerge with different
perceptions of the same object because of three perceptual processes: 1. Selective attention 2. Selective distortion and 3.
Selective retention. Selective Attention. People are exposed to a tremendous amount of daily stimuli: the average person may
be exposed to over 1500 ads a day. A person cannot possibly attend to all of these; most stimuli will be screened out.
Selective attention means that marketers have to work hard to attract consumers‘
notice. A stimuli is more likely to be attended to if it is linked to an event, satisfies current needs, intensity of input changes
(sharp price drop). Selective Distortion. Stimuli do not always come across in the way the senders intend. Selective distortion
is the tendency to twist information into personal meanings and interpret information in a way that will fit our
preconceptions. Unfortunately, there is not much that marketers can do about selective distortion. Advertisers that use
comparative advertisements (pitching one product against another), have to be very careful that consumers do not distort
the facts and perceive that the advertisement was for the competitor. Selective retention. People will forget much that they
learn but will tend to retain information that supports their attitudes and beliefs. Because of selective retention, we are likely
to remember good points mentioned about competing products. Selective retention explains why marketers use drama and
repetition in sending messages to their target market. We remember inputs that support our beliefs, forgets those that don‘t.
Elements of Perception We will examine some of the basic concepts that underlie the perception process. Sensation is the
immediate and direct response of the sensory organs to stimuli (an advertisement, a package, and a brand name). A stimulus
is any unit of input to any of the senses. Sensory receptors are the human organs (i.e., the eyes, ears, nose, mouth, and skin)
that receive sensory inputs, sight, sound, smell, taste, or touch. Human sensitivity refers to the experience of sensation.
Sensitivity to stimuli varies with the quality of an individual‘s sensory receptors and the amount or intensity of the stimuli to
which he/she is exposed.
Sensation itself depends on energy change, the difference of input. Thus, a constant environment, whether very busy and
noisy or relatively quiet, would provide little sensation because of the lack of change, the consistent level of stimulation. As
sensory input decreases, the ability to detect changes increases. This ability of the human organism to accommodate itself to
varying levels of sensitivity as external conditions vary not only protects us from damaging, disruptive, or irrelevant
bombardment when the input level is high but has important implications for marketers. The Absolute Threshold - The lowest
level at which an individual can experience a sensation is called the absolute threshold. The point at which a person can
detect the difference between ―something‖ and ―nothing‖ is that person‘s absolute threshold for the stimulus. Sensory
adaptation is a problem that causes many advertisers to change their advertising campaigns regularly. Marketers try to
increase sensory input in order to cut through the daily clutter consumers experience in the consumption of advertising.
Some increase sensory input in an effort to cut through the advertising ―clutter.‖ Other advertisers try to attract attention by
decreasing sensory input.
Information processing is a series of activities by which stimuli are perceived, transformed into information and stored. There
are four major stages in the information-processing model, viz., exposure, attention, interpretation and memory. It is the first
three, which constitute the perception process. Exposure occurs when a stimulus such as an advertisement comes within
range of a person‘s sensory receptor nerves-vision. Attention occurs when the receptor nerves pass the sensation on to the
brain for processing. Target customer allocates cognitive processing capacity •i.e. pays attention to ad. Interpretation is the
assignment of meaning to the received sensations. Target customer interprets the message •i.e.‘ message sent = message
received‘ Memory is the short-term use of the meaning for the immediate decisionmaking and the longer-term retention of
the meaning. –Target customer stores the advertisement and message in memory so can be accessed when needed. Process
of Perception There is normally a linear flow from exposure to memory. Exposure – Attention - Interpretation – Memory
Perceptual process As we can see in the perceptual process in figure there is a linear flow from exposure to memory. But,
these processes occur virtually simultaneously and are clearly interactive. It implies that our memory influences the
information we are exposed to, attend to, and the interpretation we assign. At the same time, memory itself is being shaped
by the information it is receiving. Much of the interpreted information will not be available to active memory when the
individual needs to make a purchase decision. The perceptual process consists of
many sub processes. We can understand this by taking a note of the inputthroughput – output approach. This approach is
based on the fact that there is an input, which when processed gives outputs. That is, the perceptual inputs will comprise of
stimuli in the environment.
 SECTION-C
Case Study

13. Case Questions:

When you finally opt for practice after coming out of the dilemma of “whether to opt for practice or job”; another big
question that comes to your mind is “How to grow practice”. As advertisement and other means of soliciting clients
are prohibited for Chartered Accountants, only words of appreciation from existing client can bring you the new
clients, however there are few other ways by which you can grow your practice without violating the code of ethics
as laid down by the ICAI. In this article, I will share with you few ways to grow your practice in good and efficient way.

1. Increase partners in your firm: Partnership and LLPs are need of the hour; many new members who are working solely are
constantly facing the problem of “whether to focus on work in hand or to scout out in search of new work”. Hence it is better
to add new partner so that one partner can look after the work and others can scout for new work. Firms must review on
periodical basis, the strength of partner they require to expand their revenue base. However it is easy to talk about “Adding
the new partners” than implementing it, because of various reasons mentioned below:
a. Lack of mutual understanding.
b. Unclear revenue/ profit sharing models.
c. Ego clashes between Junior and senior members.
d. Demand of fixed pay from the new partners irrespective of the work they bring on the board.
Before entering new partner(s), you must get clarity on at least on these points and get them documented in order to avoid
any future disputes that may arise.
2.  Get work on referral basis from Seniors:
Institute have no problem if one Chartered Accountant gives some work to other on referral basis, hence members who
newly entered into practice must request senior members they already knew to refer some work to them on revenue sharing
basis. Generally seniors keep the major share of revenue for the work executed solely by the junior member but it is
necessary for junior members not to focus much on money during initial days instead they should focus on getting the
knowledge and exposure. These referral works will give you better understanding about the assignments and slowly you can
get assignment of similar nature from others.
3. Network to get work:
Networking is must for chartered accountants to get new work, however that doesn’t imply that one must keep on attending
all social events and seminars, all you need is to kill your hesitation about breaking the ice in every social gathering or
seminars that you are attending. Use tea break to talk to other members, don’t hesitate in exchanging cards. Also if possible
write a thank you mail describing the meeting and how you look forward to future interactions with them. Do networking
keeping in mind the code of ethics laid down by institute.
4. Meeting with potential clients:
Generally new members waste their precious time with meeting potential clients and ends up wasting time, efforts and
money. This happens because of not setting the clear agenda about the meeting. It is must to understand the requirement of
client before you go out to meet them, if you are not well prepared for their requirement, the outcome of whole exercise will
be zero.

5. No substitute for expert knowledge:

If you want to achieve professional success in true terms, you must gain expert knowledge in the area of your practice. Expert
knowledge comes with time, exposures and experience, till then you must keep on reading and updating yourself with the
latest developments. Make reading a daily habit irrespective of your busy schedule. Try to write articles on the topics you
learnt on various platforms available to you. Also don’t hesitate to clarify your doubts with the senior members who are well
versed with subjects and procedures.
6. Delay in getting the fees:
It happens with many that even after finishing the assignment we don’t get the fees on time which leads to working capital
crunch during initial years of practice. Members must keep proper billing system as well follow up mechanism to overcome
this.  Sometime you can also ask for advances from clients.
7. Focus on the cities where there is scarcity of chartered Accountants:
There is no dearth of chartered accountants in bigger cities; however there are many small cities or towns in the India where
there are no Chartered Accountants working or very few Chartered Accountants are working. You can open a branch office
there as per the regulations of institute or visit regularly to those places to get good work exposure. In smaller cities due to
lack of competition, you can easily make a name for yourself.
8. Focus on the quality:
Irrespective of the fees, one must never compromise with the quality. Once you start the habit of compromising with quality
of work, it is very difficult to break it afterwards. Quality work always command respect from your clients and other
professional colleagues. Work quality review checklist must be developed for all type of routine works you handle, so that
there is no scope of compromise in quality of work executed.
Having your independence at work, choosing your own clients, providing services in your area of specialisation and interest
are few reasons to start your own chartered accountancy practice. In a scenario where more and more CAs are entering into
practice, it is opportune for you as well to fulfil aspirations of establishing your own firm.

The trend of setting up one’s own practice or consultancy in India has seen a recent spurt. GST has become a major service
and business opportunity for CAs, as the biggest taxation reform of the country requires more enterprises to pay taxes, and
ensure compliance with taxation laws, rules and regulations.

The steady globalisation of the Indian economy offers continuous opportunities in practice for CAs, in areas like knowledge
process outsourcing, IFRS compliance, and forensic accounting. The traditional areas of practice include financial reporting,
taxation, audit expertise, and insurance advisory.

As immense are the opportunities for CAs to grow and excel in practice, as daunting is the idea of establishing one. There is
no denying that like any business, it would require patience, planning and process. So where do you start?

Before starting your practice, it is important to do your research and ask yourself questions so that you can gain a sense of
direction and purpose.
Some things that you should ponder over include:

1. Do I have the experience to handle a business and employees?

2. Do I have the capital needed to start a firm?
3. Do I have a clear vision for my accounting business?
4. Do I have the motivation required to succeed?
5. Do I have support from family members?
6. How will I set my practice apart from those of other entrepreneurs like me?

Once you have answered these questions and know that you are starting an accounting firm for all the right reasons, you can
follow this simple step-by-step guide:
Step 1: Create a detailed business plan:
•   Define your practice values:
Before starting a CA firm, it is important to establish the mission of your firm and its overall values. For example, a CA firm’s
mission could be to provide holistic support to clients, integrity of performance and constant innovation in tackling matters
related to accounting. Laying down the core values of your firm and what it stands for, will help build the very USP that
differentiates you in the market. This helps your firm in client acquisition in the starting phase, and in the long run, builds
client relationships and establishes your firm’s goodwill.
  Have an entry strategy:
When entering the industry, you will have to decide on which sector your firm will specialise in. For example, will your CA firm
deal with specialised areas of accounting or will it be a general practice. To arrive at this, it is important for you to examine
your skills and identify what you’ll be able to do best. Usually, these areas include taxation, audits or mergers and
acquisitions. Apart from this, your entry strategy should also involve deciding whether to start your own practice or to take
over another practice. You can also merge with a practice or enter a partnership.
Create a client strategy:
Once you’re sure of the service(s) your firm would provide, the next step is to target your audience. Your area of expertise
enables you to segment the market and identify your prospective clients. Then comes the dynamic process of acquiring them,
where your business development skills come into play.

Yes, word of mouth and references would help grow your business. However, in the digital age, e-Service is the next big thing.
This requires you to develop your firm’s website, where you can market your services and have potential clients post queries
and get in touch with you.

Research indicates that the concept of Virtual Service Provider will generate 40% of the overall income for professionals. In
the coming years, services like LLP formation, statutory audit, company audit, MCA compliance, GST and legal consultation
will be provided virtually, end to end.

You should also build an online presence of your firm on social media and other online CA portals, where you can connect
with new and emerging enterprises. Once you get your networking right, you are on track in building your initial clientele.
Draw up a pricing strategy:
A pricing strategy will determine the rate of client acquisition. It is important to decide how you will charge your client. You
can choose from a variety of fee systems like a time-based fee, performance-based fee or a fixed fee. Whatever option you
choose, ensure that you charge the client the correct fee that helps you cover your costs and work towards your financial
targets. Bear in mind that while under-quoting will cause financial problems, over-quoting will drive clients away to your
competition. So, it is important to set an optimal rate that will enable you to earn profits while matching the client’s
expectation, following ICAI norms on pricing of assignments could help you achieve this.
Step 2: Prepare a financial plan:
Understanding the right financing option
While starting your practice, you need to evaluate sourcing options for your capital. If you are considering self-financing by
investing your income and accumulated savings, it is wise to be prudent as you need to take care of your household
expenses, and retain insurance cover that you may have availed.

External financing, on the other hand, can be a better mode of financing your practice. You can avail a greater amount of
funds, utilise them as required and preserve your own capital to respond to other short-term needs. You can go for a
customised loan for CAs which takes your professional qualifications into account and gives your faster loans with a better
deal.

While personal financing is convenient, it can be risky to invest all your funds in a business. External financing keeps your
personal finances separate from your business funds and also gives you access to more money. If you are on the fence, you
can opt for a mix of the two.
Step 3: Make a breakup of the costs
Identifying the nature and measure of costs is critical to ascertaining how much capital you require, and how much should be
the desired returns.
-  Office space (buying which would require a considerable cash outflow and give your firm a valuable asset; renting which
would entail a regular expense for your firm and prove a safer option till it establishes retained clients and sustained income)
-  Infrastructure, which encompasses furniture and fixtures, internet connection, workstations and office equipment
(desktops, photocopiers, scanners) that you can buy or rent
-  The right software solution that enables you in assisting your clients
-  Hiring and training personnel; you can choose to hire qualified CAs, trained professionals, or articled assistants, based on
the service you provide
-  Marketing costs like branding, website development, social media campaigns, print advertising

A business loan for CAs can help you meet all the costs and ensure that your practice runs smoothly.
Step 4: Making your cash flow grid:
As a CA, you understand the importance of documenting finances and projecting cash flows. Prepare a cash flow grid that
predicts the long-term profitability of your firm and allow you to better plan for the following years. A specimen of the same
is presented hereunder.
A 5-year projection of the cash flows, as illustrated above, reflects the financial viability of your firm, helps plan capital and
regular expenses better and thereby, assures you that the actual returns stay in line with the projected returns.

You can also opt for a CA loan in a flexi format which helps you borrow as and when a need arises and prepay as you have
extra funds with you. A unique offering, it comes with several benefits.

Working for self always seems to be more appealing than working for someone else. In addition to creating a work-life
balance, you live and fulfil your own dreams. With the indirect tax system in India being completely revamped in India with a
host of clients looking for consultancy on GST, there is no better time than today to consider setting up your own CA firm.