Reserve Bank of India (RBI) Reserve Bank of India (RBI) The Reserve Bank of India (RBI) The RBI was established on 1st April 1935 under the RBI Act, which was passed on 6th March 1934. After the establishment, RBI took over the functions of issuing paper currency from the central government and the controlling of the credit from the Imperial Bank of India (now called as State Bank of India). The bank was nationalized on 1st January 1949 in terms of the RBI Act 1948. The RBI head office is located at Mumbai since its inception. The management of RBI is vested in the central board of directors which comprises of one full time Governor and not more than four Deputy Governors appointed by the central government under section 8 (1) (a) of the RBI Act 1934. 10 directors from various fields of business, industry, finance and cooperation may nominate by central government. Four directors nominated by the central government. One from each of the four local boards, One Government official nominated by the central Government. RBI has four local boards in Mumbai, Kolkata, Chennai and New Delhi. The local boards carry out the functions of advertising the central board of directors on such matters of local importance. Generally the local boards deals with the management of regional commercial transactions. To carry out functions smoothly and efficiently, the RBI has 15 departments. According to the Preamble to the Reserve Bank of India Act 1934, the primary objective of the Bank is to regulate the issue of bank notes and keeping of reserve with a view to securing monetary stability in India and generally to operate the currency and the credit system of the country to its advantage. The major functions of RBI are mentioned below. Major Functions of RBI • Monopoly of Note Issue : Under section 22 of the RBI act, it is the sole authority for the issue of currency other than one rupee coins, one rupee notes and subsidiary coins are issued by the Ministry of Finance, Government of India, but these are put into circulation through RBI. AN important task before the Central Government is to maintain the stability of currency and it can discharge this responsibility efficiently only if it exercises proper control on commercial banks. The RBI has also the responsibility of advising the government on financial matters. If the RBI has full control over the issue of currency then its task is tendering the right type of advice becomes easy. Therefore, the monopoly of note issue has been the prerogative of central banks in different countries. • Banker to the Government : Under the section 20, 2, and 21 A of the RBI act, the bank looks after the current financial transactions of the government and manages the public debt of the government. As a government banker, the RBI conducts banking business with out any charge, viz., accepting money on government account, making payments on its behalf etc. It also provides short-term advances to state governments, which are called ways and means advances. In addition, the RBI gives advisory services to the government on all monetary and banking matters i.e., industrial finance, cooperative organizations, international finance etc. • Bankers Bank : RBI serves as a clearing agent for commercial banks. It provides clearing and remittance facilities to the scheduled commercial banks at centers where it has offices or branches. RBI has been vested with a wide range of powers and supervision and control over Commercial and Cooperative Banks. RBI also serves as a lender of last resort by re-discounting eligible bills of exchange of commercial banks during the period of credit stringency. The RBI performs its functions as bankers bank on the basis of the statutory authority vested in it to discharge its supreme duty of controlling the volume of credit and money supply and maintaining the stability of the currency. • Controller of Credit : As a controller of credit, the RBI must have a complete control over currency and banking system in the country. This is essential because credit plays a very dominant role in the settlement of monetary and business transactions of all kinds and thus it represents a powerful force of good or evil. RBI adopts quantitative or general methods such a s bank rate, open market operations and the power to vary the reserve requirements of the banks, but also extensive power of selective credit controls and direct actions. By adopting such methods, the RBI tires to influence and control credit creation by commercial banks in order to stabilize economic activity in India. • Exchange Management : The RBI has responsibility to maintain not only the internal value of rupee, but also to maintain the external value of rupee. In this connection the RBI sells and purchases the foreign exchange of fixed rates through its exchange control department. RBI has the responsibility of maintaining the fixed exchange rates with all other member countries of the international monetary fund. It has also the responsibility of maiontaining the exchange value fo the rupee in terms of the US dollar or gold as accepted by IMF. The RBI manages the exchange control operations by supplying foreign currencies to importers and persons visiting foreign countries on business, studies, etc, in keeping with the rules laid down by the Government of India. • Monetary Data and Publications : RBI acts as a source of all economies, financial and Banking data, which are essential for the critical evaluation of economic policies. For this purpose, the RBI publishes the data continuously in its weekly statements in the monthly RBI bulletin, trends and progress of banking in India and other periodic publications. These publications provide valuable statistical information on the monetary and financial developments in the economy and also on the working of the banking system. • Other Promotional Functions : RBI performs a number of developmental and promotional functions. Some of the promotional functions are given below. 1. RBI has expanded banking facilities in rural and semi urban areas by reducing inter regional disparities 2. To improve the working of Indian money market, RBI introduced bill market scheme 3. RBI has also assisted the emergence and growth of development banking and other term lending institutions, such as the Unit Trust of India (UTI). 4. The RBI has helped the establishment of Export Import bank in India to provide finance to exporters. 5. RBI appoints ad-hoc committees / expert group from time to time, to enquiry into specific banking problems and make recommendations to solve them. Here are some important points to remember about RBI : • RBIs central office is in Mumbai. • RBI has 22 regional offices. • It was nationalized on 1st January 1949. • It prints Currency in 15 Languages. • Its predecessor was Imperial Bank of India (1921). • RBI came into existence on the recommendation of Hilton Young (Royal) commission as per RBI act 1934. • It is the member bank of Asian Clearing Union (ACU) and IMF (International Monetary Fund). • RBI has Board of Directors with 21 (Governor and 4 Deputy Governors etc) • The present Governor of RBI is Raghuram Rajan. Deputy Governors : • Rama Subramaniam Gandhi • Urjit Patel • Anand Sinha • Harun Rashid Khan. 1. Currency notes are issued by RBI under Minimum Reserve System 1957 with backing of Rs. 200 Cr Reserve (Gold : Rs. 115 Cr + Foreign Securities Rs. 85 Cr) 2. RBI Invests foreign exchange reserves in multi-currency, multi-market portfolios such as securities, other central banks and Bank of International Settlements (BIS) and deposits in foreign commercial banks. The yield on such investments is low. 3. RBI does not pay interest on Govt. deposits with it. The following monetary instruments are in the hands of RBI to control credit and to bring economic stability in the economy : • Bank Rate : Rate of rediscount at which the RBI discounts the first class bills of exchange brought by the banks. • Repo Rate : Injection of liquidity by the RBI is termed as Repo Rate . This was introduced in Dec. 1992 and Reverse Repo Rate in Nov. 1996. RBI buys Govt. Securities for a short period usually a fortnight, with an agreement to sell it later. Thus repo rate is a short-term money market instrument to stabilize short term liquidity in the economy. • Reverse Repo Rate • Repo Rate is the rate at which the RBI lends to commercial banks where as the Reverse Repo Rate is the rate at which the RBI borrows from the commercial banks against securities for a very short period. • Repo and Reverse Repo rates are used as policy instruments for day-to-day liquidity management under the liquidity adjustment facility. • Cash Reserve Ratio (CRR) : It refers to the percentage of net demand and time deposits which the scheduled commercial banks have to keep with RBI at zero interest Rate as per RBI act 1934. • Statutory Liquidity Ratio (SLR) : It refers to the percentage of net demand and time deposits which the scheduled commercial banks have to keep with themselves. i.e. by purchasing Govt. Securities or in the form of cash or gold as per Banking Regulation Act 1949, Sec 24. • SLR is a mechanism used by Commercial Banks for providing credit to the Govt. • Open market operations : RBI buys or sells Govt. Bonds in the second Ratio. 1. RBI Amendment Bill 2005 provides flexibility to RBI in fixing the CRR and SLR. 2. Though RBI is responsible for the safety and stability of the Banking sector, it is not legally independent. ========================================================== Functions / Duties of the RBI Governor What Does RBI Governor Do ? • He sits at the Central Office of the Reserve Bank (which was initially established in Calcutta but was permanently moved to Mumbai in 1937) and formulates all the policies. • Ofcourse, he cant sign on every note issued by RBI as I was thinking, but His autograph appears on all currency notes and he controls the countrys monetary, currency and credit systems. • In simple words, we can call him the bankers banker. He is also the banker to the government. • He totally influences a wide range of micro and macro economic issues in the country. • His actions influence not only the entire banking system, but also the stock markets, the economy and peoples lives in general. Indeed, if he sneezes, the markets tend to catch a cold. • He heads an institution which is the sole authority for issuing bank notes. The central bank chief also supervises all banking operations in the country. He supervises and administers exchange control and banking regulations. • Besides administering the governments policy, he also issues licenses for new banks, private banks and foreign banks. • He helps formulates, implement and monitor the monetary policy. The objective is to maintain price stability and ensure adequate flow of credit to productive sectors. • The central bank chief announces the biannual Monetary and Credit Policy. The governor announces the changes (if any) in the policy for the year: whether there will be a cut in the cash reserve ratio, bank rate, lending rate, and interest rate. It will also project the gross domestic product growth of the country for the year. • He controls the countrys interest rates on deposits and advances, but only to the extent of prescribing interest rate on saving accounts and a minimum lending rate. He prescribes the minimum cash reserve and liquid assets to be maintained as a ratio of net demand and time liabilities, and also lays down norms for investments in other assets by primary co-operative banks. • He regulates and supervises the nations financial system. He sets down broad parameters of banking operations within which the countrys banking and financial system functions. The aim is to maintain public confidence in the system, protect depositors interest and provide cost-effective banking services to the public. • He manages the Foreign Exchange Management Act, 1999 to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. • He monitors the issues and exchange (or destruction) of currency and coins not fit for circulation to give the public adequate quantity of supplies of currency notes and coins and in good quality. • He also monitors the implementation of government-sponsored poverty alleviation schemes. • He plays a vital role in helping promote functions to support national objectives. • He, with his deputy governors constantly reviews rules and regulations imported by RBI to make them more customer-friendly. • He also governs and supervises primary co-operative banks, popularly known as urban co-operative banks, through his Urban Banks Department. • The RBI governor also has a say in monitoring and facilitating flow of credit to rural, agricultural and small-scale industries sectors, framing policies on priority sector lending, giving support to agriculture banks, and regulates regional rural banks, state/central co-operative banks and local area banks. • Present Governor of RBI is Mr. Raghuram Rajan. Deputy Governors are K. C. Chakravarthi, Anand Sinha, Harun Rashi Khan, Urijit Patel. Automated Teller Machine (ATM) Introduction - Advantages and Disadvantages Automated Teller Machine (ATM) Introduction - Advantages and Disadvantages In my childhood I used to think that ATM is nothing but Any Time Money. It took me 22 years to know that its Automated Teller Machine. Now a days everybody knows what an ATM is and how useful it is. But for the sake of formality we shall start with the technical definition of ATM. The Automated Teller Machine (ATM) is a machine which facilitates basic banking activities viz, withdrawal of money, depositing money and checking of ones own balances etc. ATM does most of the functions of cashier in the bank. ATM is operated by plastic card issued by the bank which is called as ATM Card, with it special features. This plastic ATM Card is replacing cheque, personal attendance of the customer, banking hours and bank holidays restriction and paper based verification. Electronic banking i.e., computerization of banking operations in India has picked up during the second half of 1990s. This has helped to introduce ATMs. ATMs are established in important places by the authorized bank in cities and important towns. The Indian Railway gave a mandate to 10 leading banks to host ATMs at Railway Stations. Banks in India realized the need for ATM-interchange deals to keep their overheads under check . Under ATM inter-change, customers of one bank are offered free access to the other banks ATM network What is the difference between Credit Card and ATM Card ? The essential difference between the Credit Card and ATM Card is that the former offers credit facility as the name suggests, whereas the latter in a networked environment allows the occupant of the cardholder to be directly debited. Advantages of ATM : • Round the Clock Services : ATM provides banking services to its customers round the clock, 24 hours a day, 7 days a week and 365 days a year. • Access to bank from any part of the world :Essential banking services like deposits, withdrawals transfer of funds, etc can be accessed by customers from any part of the world. • Expansion of Services to any corner of the world : Of the Banks can expand their services to any corner of the world by providing electronic access to its customers. • Reduction in cost of operation : This reduces human intervention and thereby reduces the cost of operations and increases profitability of banks. • For shopping Purpose : Now a days almost every shopping mall, restaurant and other organizations are accepting credit card payments. Disadvantages : • Cannot be provided in rural areas : In a country like India, where banks are having large number of rural and non-computerized branches, ATM services cannot be provided. • Presence various constraints : Even if banks make some efforts to introduce ATM services country side, various constraints like illiteracy, security concern, etc., may not permit that. • Limitation of cash withdrawals : Again there is a limitation of cash withdrawals from ATM. For example, many banks do not permit withdrawal of more than 25,000 at a time. • Cash deposit facility is not safe : Similarly cash deposit facility is restricted and not safe as dropping of envelope with can in ATM is not advisable. • Possibility of misusing ATM card : ATM card, if misplaced, lost or stolen, may be misused. There are number of such reported incidences now a days. • Loss of personnel touch with the Banks : Last but not the least, customers lose personal touch with their bankers. The ATM usage in India is growing very fast, i.e., at 300 percent, as per the survey conducted in 2002 the density in relation to population stands at a mere 4 ATMs per million population, now its triplicated. Indian Banking Industry has developed during this 11 years of span and it also has introduced so many new technologies like Talking ATMs and White Labeled ATMs. Unit Banking - its Merits and Demerits The Unit Banking system is that system of banking under which an individual bank carries on banking business either through a single office or through a few offices operating within a limited area (Note :unit = single, remember like that) . In this system, independent, isolated units perform banking business. The size and are of operation of unit banking are much smaller when compared to branch banking. Unit bankin gsystem originated and grown in the U.S.A. Different unit banks in the U.S.A are linked with each other financial centers in the country through Correspondent Banking. Merits / Advantages of Unit Banking :3 The unit banking enjoys the following advantages. 1. No Problem of Mismanagement : Each bank is small scale unit hence there is no problem of management and supervision. A unit bank secures all the advantages of small scale operaions and hence there are less chances of mismanagement or incompetent management. 2. No delay in Taking Decisions : In unit banking system every bank is an independent unit, hence there will be no delay in taking decisions. 3. Personal Contact with the Customers : Unit Banking system being a small scale independent unit can maintain good personal contacts with the customers for efficient management of the bank. It is said that in case of unit banking system the manager can maintain good personal contact with the customers and businessmen. 4. Low Overhead Cost : In case of unit banking system the over head cost will be low than in case of branch banking system. 5. No Concentration of Monopoly Power : With the help of unit banking system it is possible to create socialistic pattern of society which is a policy of Indian Government. 6. Promotes Regional Balance : Under unit banking system, there is no transfer of resources from rural and backward areas to the big industrial and commercial centers. This tends to reduce regional imbalance. 7. Initiative in Bank Business : The bank officers, under the unit banking system, are fully acquainted with the local problems. SO they can take initiative in taking important decisions on the various issues confronting the bank. This makes the banking system more elastic. 8. Discontinuance of Inefficient Branches :Under unit banking system, weak, inefficient and non-profitable branches are automatically eliminated. No prtection is provided to such banks. 9. No Diseconomies of Large-Scale Operations : Unit banking is free from the diseconomies and problems of large-scale operations which are generally experienced by the branch banks. 10. More Operational Freedom : The managers of the unit banking system are given more discretionary powers so that they can study the problems of local customers and provide better services to them on merit. Disadvantages or Demerits of Unit Banking System : Generally speaking the advantages of Branch banking are the disadvantages of Unit Banking. Following are the important disadvantages of Unit Banking System. 1. Lack of Economies of Large Scale : Unit banking system being operated on small scale, is deprived of economies of large scale operations. 2. More Case Reserve : When compared to branch banking system, the banks operating under unit banking system must have more case reserve. In unit banking system it is not easy to a unit bank to draw on another unit bank. 3. High Cost of Operations : In case of Branch banking system the remittance of funds from one place to another is of great ease and at a lower cost than unit bank. It is not easy to adjust the interoffice indebtedness in case of Unit Banking system. 4. High Risk bearing : In case of unit banking system, the business is highly localized and any adverse conditions in business in the area severely effect the bank. The banks under unit banking system cannot withstand greater shocks or serious crises. 5. Lack of Mobility of Funds : In case of unit banking system the concentration of funds is at one region. There is no possibility of movement of funds between the regions and localities resulting in different interest rates at different places. 6. Does not Provide Complete Banking Service : The bank operating under unit banking system does not provide complete banking service to its customers as done in case of Branch banking system. 7. Problem of Supervision by Central Bank : It becomes very difficult to supervise each and every bank operating under unit banking system. 8. Absence of Division of Labor and Specialization : Unit banks because of their small size and limited financial resources are not able to introduce and get advantages of division of labour and spel\socialization. Such banks cannot afford to employ highly trained and specialized staff. 9. Inability to face cirsis : Limited resources of the unit banks also restrict their ability to face financial crisis. These banks are not in a position to stand a sudden rush of withdrawals. Inability to face economic crisis was the reason why hundreds of unit banks failed in the U.S.A during the great depression of 1929. 10. No Banking Development in Backward Areas : Unit Banks, because of their limited resources, cannot afford to open uneconomic branches in smaller towns and rural areas. As such, these areas remain unbanked. 11. Costly Remittance of Funds : A unit bank has no branches at other places. As a result, it has to depend upon correspondent banks for transfer of funds from one place to another. This makes the movement of funds more expensive and inconvenient for the businessmen. 12. Disparity in Interest Rates : Since easy and cheap movement of funds does not exist under the unit banking system, interest rates tend to vary considerably in different places. 13. Local Pressures : Since unit banks are highly localized in their business, local pressures and interferences generally disrupt their normal functioning. 14. Undesirable Competition : Unit banks are independently run by different managements. This results in undesirable competition among different unit banks. Marketing Management As philip kotler says Marketing management is the process of planning and executing the conception, pricing and promotion and distribution of goods, services and ideas to create exchanges with target groups that satisfy customer and organizational objectives Thus, Marketing Management is a functional area of business management which has to deal with the consumers needs and wants in the first place, followed by promotion and pricing to create specific demand for the goods or services or idea in question, and then flow of goods or services or ideas to the customer and finally information from the customers about expected satisfaction. Steps in Marketing Management Process : Setting Marketing Objectives : The process of marketing management starts with the activity of setting objectives. The organizational mission provides the priorities for scanning the environment and finding out the opportunities. Analyzing marketing opportunities : This involves analysis of opportunities in the light of company strengths and weaknesses - both internal and external. The task may be to analyze long run opportunities or short run opportunities or even medium term. • To identify and evaluate its opportunities there is the requirements of a reliable information system. This, helps the companies know the needs and wants of their customer, their locations, buying and social practices and so on. Researching and Selecting Target Market : Now the firm is ready to research the select markets. It needs to know how to measure attractiveness of any given market. Marketing people must understand the major techniques for measuring market potential and forecasting future demand. • These become the key in deciding which markets and new products to focus on. Modern marketing concept cares for dividing the markets into smaller segments, evaluating the selecting and targeting certain ones and deciding on the companys positioning on each market. Designing Marketing Strategies : The marketing strategy spells out the game plan for attaining the business objectives or product / market objective. Marketing strategy may be defined as Marketing strategy defines the broad principle by which the business unit expects to achieve its marketing objectives in a target market. It consists of basic decisions on total marketing expenditure, marketing mix and marketing allocation • The four Ps of marketing management - Product, Price, Promotion and Place and these are decided and directed at the consumers on the basis of proper diagnosis of firm-market system arrived through the process of marketing research. • The company has also to decide how to divide the total marketing budget among the various tools of marketing mix. Planning Marketing Programmes : It is not enough to formulate only the broad strategies by which the business expects to achieve its marketing objective but also plan the supporting marketing mix programmes. Without such programmes even the best conceived marketing strategies may fail. • Decisions have to be taken regarding the features, packaging, branding, servicing policies, etc. of the product, the wholesale and retail prices, discounts, allowances and credit terms, the identification, recruitment and linking of various marketing facilitators so that its products and services are efficiently supplied to the target market, advertising, sale, promotions, publicity etc., Organizing, Implementing and Controlling the Marketing Efforts : The final stage in the marketing management process is organizing the marketing resources and implanting and controlling the marketing plan. The company is required to design a marketing organization that will be able to degenerate the marketing plan up to work, i.e., implementing its marketing organization is typically headed by marketing vice-president, who performs two tasks. • First he / she co-ordinates the work of marketing personnel and secondly, he / she has to work closely with the Vice-presidents of finance, production, R and D, purchasing, personnel to Co-ordinate company efforts to satisfy customers. The marketing Vice-presidents job is to make sure that all the company departments collaborate to fulfill the companys marketing promise to the customers. Importance of Marketing - to the Society Friends, in our last lesson we have discussed about the introduction and few famous definitions of marketing. In this post we shall discuss about the importance of marketing. For the sake of avoiding confusion and make the concepts simple, we have divide this topic into five sections. Those are, • The importance to the Society • The importance to the Firm • Importance in Developed Economy • Importance in Underdeveloped or Developing Economy • Importance in a Sellers or Buyers Market. • In this post we shall discuss about the Importance of Marketing to the Society. Importance of marketing to the Society : Delivery of Standard of Living to the Society : Main liability of marketing is to produce goods and services for the society according to their needs and tastes at reasonable price. Marketing discovers needs and wants of the society, produces the goods and services according to these needs, create demand for these goods and services, encourages customers to use them and thus, improves the standard of living of the society. Decreases in Distribution Cost : Marketing aims at reducing the cost of distribution as far as possible so that the commodities might be within the reach of maximum number of consumers. It increases the level of consumption in the society. Reduction in the cost of distribution directly affects the price of the commodity ad it will also be reduced. As result, customers who were unable to purchase it due to high prices can now purchase the product. • Even if we assume that the price of the product is not decreased by a manufacture even on the decrease in cost of distribution, it will increase the profit of the enterprise, which will be divided among its shareholders, and employees who are also consumers. Even if it assumed that this increased profit is not distributed among these persons, it will be invested in research and development, which benefit the whole society. Increase in Employment Opportunities : Employment opportunities are directly affected by the development of marketing. According to an estimate, about 40% of the labour force in developed countries like U.S.A., Japan, Canada, France, etc. is engaged in different activities of marketing such as marketing reserach, transport, communication, storage, warehousing, publicity, wholesale and retail trade. It is expected that in the under developed countries, like India, there is great scope of increasing employment opportunities by developing marketing activities. Protection against Business Slump : Business slump causes unemployment, slackness in the success of business and great loss to the economy. Marketing helps in protecting society against all these problems. Marketing includes the discovery of new markets for the goods, modifications and alterations in the quality of product, and development of alternative uses of a product. It reduces the cost of distribution and maintains the level of sales volume. All this protects the business and industrial enterprises against the problem of business slump. Increase in National Income : Successful operation of marketing activities creates, maintains and increases the demand for goods and services in the society. It results in the increased level of production and it increases the scope and area of marketing. This increase, in turn, increases the national income, which is beneficial to the society as a whole. Market Basics All our friends are asking about the previous papers of Marketing for SBI Clerks Online Exam 2014. But we came to know that many of them dont have the basics of Marketing. So we felt it will be helpful for them if we post some basic information about marketing. So friends, before spending your time on old or practice papers just read the below articles first. These are the basics of Marketing. It wont take much time to complete this. But trust us, it will really helpful for you while solving the marketing section of upcoming SBI Clerks Online Exam. Ok, why to waste time? have a look at the following details........ Marketing Marketing is nothing but to Tell about your product and to Sell it. The technical definition is “ Marketing is the process of planning and executing the concepts, pricing, promotion and distribution of ideas/goods/services to satisfy individuals/organizational “. TYPES OF MARKET Consumer Market : Companies selling mass consumer goods and services such as soft drinks, cosmetics, air travel and equipment spend a great deal of time trying to establish a superior brand image. But brand strength depends on developing a product and packaging , availability, communication and reliable service. Business Market : Companies selling business goods and services often face well trained and well informed professional buyers who are in evaluating competitive offerings. Business buyers buy goods in order to make or resell a product to others at a profit. Business marketers must demonstrate how their products will help these buyers achieve higher revenue or low costs. Global Markets : Companies selling goods and services in the global market place additional decisions and challenges. They must decide with in countries how to enter each country, how to adopt their products and service features to each country. How to price their products in different countries and ow to adopt their communications to fit different cultures. These decisions must be made in the face of different requirements for buying, negotiating, owing and disposing of property, different culture, language, legal and political systems and currency value. Non Profit and Government markets : Companies selling their goods to nonprofit organizations such as Churches, Universities, Charitable organizations or government agencies need to price carefully because these organizations have limited purchasing power. Lower prices affect on the features and qualities of products. There are ceveral types of marketing are there, some of them are Bench Marketing • The Bench Marketing is nothing but the comparison of the business processes with competitors and improving prevailing ones. Drip Marketing • Drip Marketing is nothing but sending promotional items to Clients. Viral Marketing • Viral Marketing is nothing but, Marketing by the word of the mouth, having a high pass-rate from person to. The best example for this is Creating a buzz in the industry. Guerilla Marketing? • Guerilla Marketing is an Unconventional marketing intended to get maximum results from minimal resources. (just remember Maximum results from Minimum resources) Social Media Marketing • Marketing using online communities, social networks, blog marketing etc is called the social media marketing. Direct Marketing If the company directly reaches to the customers on a personal basis (ex : phone calls, private mailings, etc) rather than traditional channel of advertising (like TV, Newspapers, etc) then that type of marketing is called the Direct Marketing. Types : There are number of types in direct marketing, Some of them are…… • Direct Mail Marketing : Advertising material sent directly to home and business addresses (This is the most common form of direct marketing) • Telemarketing : It is the second most common form of direct marketing, in which marketers contact consumers by phone. • Email Marketing: This type of marketing targets customers through their email accounts (you might have observed them in your e mails too) Indirect Marketing • Distributing a particular product through a channel that includes one or more resellers is called Indirect Markeging (simply we can say that telling about our product indirectly) Difference between Direct and Indirect Marketings : In Direct marketing you advertise your own products or services. But in Indirect marketing you advertise somebody else’s Product. Ex : Example of direct marketing is Shivani Sharma… As she markets her blog on her own. Example of Indirect marketing is Katrina Kaif, as she markets LUX but she doesn’t own that company ;) Internet Marketing • M marketing of products or services over the Internet is called Internet Marketing. It is also know as i-marketing, web-marketing, online-marketing, Search Engine Marketing (SEM) and e-Marketing. Digital Marketing • The marketing which uses digital advertising is called digital marketing. Television, Radio, Internet, mobile etc. =============================================== Marketing Mix (4 Ps) : The Marketing Mix model (also known as the 4 Ps) is a tool used by marketers while defining the marketing strategy. Iif you could identify the right combination of these elements, your marketing would succeed. E. Jerome McCarthy introduced the 4 Ps of Marketing as a way to describe the mix of factors required to successfully market a product. The 4 P’s are : 1. Product 2. Price 3. Promotion 4. Place (distribution) 5 P’s of Marketing : 4 P’s • Product • Price • Promotion • Place (distribution) and • People • Packaging • Process 7 P’s of marketing • Product • Price • Place • Promotion • People • Process • Physical evidence Important Note : Here the first 4 Ps are considered as the basis of any marketing process. The last 3 Ps are a recently added. SWOT Analysis SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) is a tool for auditing an organization and its environment. The SWOT Analysis is the first stage of planning and helps marketers to focus on key issues. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. Customer Relationship Management (CRM) In order to sell my product, I should maintain good Customer Relations. I mean I should interact with customers and know their needs and according to that I have to design my product. This is called Customer Relationship Management (CRM in short). The CRM concerns the relationship between the organization and its customers (to learn more about customers needs and behaviors in order to develop stronger relationships with them). Three Levels of a Product 1. Core Product 2. Actual Product 3. Augmented Product Market Research Researching (or gathering information) about Customers or Market. I mean, to discover what customers want, need, or believe (and ofcourse, how the Act). Once you came to know all the details then you can easilea get an idea on how to market your product. Market Information The Information about Market. I mean the information like the prices of the different commodities in the market, and getting the Demand and Supply information. Market Segmentation Market Segmentation is nothing but dividing the market into Parts. Into different homogeneous groups of consumers. The purpose of this is to allow your marketing program to focus on the subset of prospects that are most likely to purchase your offering. If done properly this will help to insure the highest return for your marketing expenditures. Branding Displaying the importance of the product and other things in the form of Logo is called Branding (this logo may consists some symbols, colours and letters) Marketing Plans and Research Functions of Marketing Plan : 1 Contents : The contents of a business firm involves several functions namely, a chart specifying the contents, opportunity and issue analysis, marketing strategy, action programme, projected and control measures. 2 Executive Summary : The executive summary is a brief description of the entire report, which contains as introduction and a description of the highlights of the marketing plan. It also includes information about the expenditure that will be incurred for implementing the plan. However, the executive summary should merely provide a brief overview of the marketing plan and its implementation process. 3 Opportunity and Issues Analysis : In opportunity and issues analysis, the marketing management analyses the opportunities available to the company in the market and the threats to the company. in the issue analysis the manager determines the issues related to the strengths and weaknesses of the company and highlights the areas which the marketing plan has to focus upon. 4 Marketing Strategy : After the opportunity and issue analysis, the marketing manager formulates a strategy to achieve the objectives of the marketing plan. This involves setting strategies to effectively and efficiently development activities. 5 Action Programs : The action programme of the marketing plan must specify the details of the strategies adopted to achieve the objectives of the firm. it should also answer the following questions. • What will be the cost of performing the activity ? • What actions are taken to do the specific activity ? • When is it doing to be done ? and • Who is going to do it? Projected Profit and Loss Statement : The projected profit and loss statement will have the details regarding the budget to be allocated to each of the activities mentioned in the action programme. The difference between the revenue and the expense is the projected profit for the organization. It accepts or modifies it and then approves the budget for the implementation of the marketing plan. Controls : The final stage in the marketing plan is the process of controlling the activities that are deviating from the planned track. The top management, from time to time, reviews the activities to see whether they are being carried out according to the plan. Necessary steps are taken to control those activities which are going off the track. Thats all for now friends. In our next post we shall discuss about the steps involved in the Marketing Planning process in detail. Happy Reading :) =============================================================== Marketing Research is just one part of an ongoing Marketing Information System. Marketing Research is used to obtain information on a particular marketing issues. Marketing Research involves systematically gathering, recording and analyzing information about specific issues related to marketing of goods, services, organization, people, places and ideas. Marketing Research is the systematic and objective identification, collection, analysis, dissemination and use of information for the purpose of improving decision making related to the identification and solution of problems (or opportunities) in marketing. The Board of Directors of the American Marketing Association has approved the following as the new definition of Marketing Research. Marketing Research is the function that links the consumer, customer, and public to the marketer through information - information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing Research specifies the information required to address these issues : • Design the methods for collecting information • Manages and implements the data collection process • Analyzes the results • Communicates the findings and their implications ======================================================== IMPORTANCE OF MARKETING RESEARCH Gap Filling : The present day marketing environment clearly indicates the increased distance between the producers and the ultimate consumers. Due to increased distance between the producers and consumers, the producers fail to get the right information with the existing source of information. The marketing research fills the gap and provides right information to the producers and also the the consumers. Effective Competition tool : Modern marketing is consumer driven. Without considering the competitors, there is no scope to survive in the market. It is the marketing research that tries to understand the nature of and provide information to the organization to develop suitable strategies to meet the competitors and survive. Marketing research is vital to maintain and improve companys overall competitiveness. Many organizations continually collect and evaluate environmental information to identify future market opportunities and threats. Strategic Information Tool : Marketing Research can helpful in answering the basic questions the marketers face. An increasing number of firms routinely use Marketing research to generate relevant information for developing effective strategies. Decision Making Tool : By emphasizing the need to gain a good understanding of customers, the marketing concept also stresses the importance of conducting marketing research in the early stages. Many firms have had major new product failures because they neglected to research market opportunities and constraints before deciding to introduce the products. Updating the Organization : In the changed environment, it is the marketing research that tries to understand the changes that are coming up in the marketing and helps the organization to bring the necessary changes in the organization to come up to the expectations of the changed environment. Marketing Orientation : Marketing research is the one which tries to understand the market and the consumer thoroughly. The information generated by the research will act as panacea to the organization to bring market oriented approach at organization level. Impact Assessment Tool : Impact of new developments in the science and technology field will be assessed by the marketing research and facilitate the decision makers to take suitable step keeping the impact of it in mind. Marketing Mix : Good marketing research will identify whether or not the marketing mix is effective enough to maximize the benefits to the firm (in terms of sales, profits, customer satisfaction and value) from available opportunities. Marketing Strategies : To benefit fully from the opportunities uncovered in the market place a firm must develop an effective marketing strategy with effective marketing mix. Extensive marketing research helps in developing suitable elements of marketing strategies. Control Technique : Marketing research facilitates the organizations to generate feedback of information from the market place to plan the activities and suggest corrective action to control the same. Thats all for now friends. In our next post we shall discuss about the Scope and Applications of Marketing Research. important Abbreviations of Marketing • ALCO - Asset-Liability Management CommitteeAPR - Annual Percentage Rate • ASSOCHAM - The Associated Chambers of Commerce and Industry of India • ATM - Automated Teller Machine • BEP - Break Even Point • BG - Bank Guarantee • BPO - Business Process Outsourcing • CNP - Cardholder Not Present • CRM - Customer Rleationship Management • CRR - Cash Reserve Ratio • EFT - Electronic Fund Transfer • EMI - Eqated Monthly Installements • EOQ - Economic Order Quality • FDI - Foreign Direct Investment • FDR - Fixed Deposit Receipts • FII - Foreign Institutional Investor • GDP - Gross Domestic Product • GDP - Gross Domestic Product • HNI - High Net worth Individual • IDRA - Industries Development and Regulation Act • IMF - International Monetary Fund • IPO - Initial Public Offering • IRDA - Insurance Regulatory and Development Authority • IRR - Internal Rate of Return • KYC - Know Your Customer • LC - Letter of Credit • LIBOR - London Inter Bank Offered Rate • M & A - Mergers and Acquisitions • MIS - Management Information System • MR - Marginal Revenue • NABARD - National Bank for Agriculture and Rural Development • NASSCOM - National Association of Software and Services Companies • NAV - Net Asset Value • NBFC - Non Banking Financial Company • NEFT - National Electronic Fund Transfer • NII - Net Interest Income • NPA - Non Performing Assets • NPA - Non Performing Assets • PAN - Permanent Account Number • PIN - Personal Identification Number • PLR - Prime Lending Rate • ROA - Return on Assets • RTGS - Real Time Gross Settlement • SDR - Special Drawing Rights • SEBI - Securities Exchange Board of India • SEO - Search Engine Optimization • SEZ - Special Economic Zone • SIDBI - Small Industries DevelopmentBank of India • SIP - Systematic Investment Plan • SLR - Statutory Liquidity Ratio • SWIFT - Society for Worldwide Interbank Financial Telecommunication • SWOT - Strengths, Weaknesses, Opportunities and Threats • VAT - Value Added Tax • YTM - Yield to Maturity
Posted on: Wed, 29 Oct 2014 11:58:46 +0000
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