Category: Lucknow University BBA Notes

Lucknow University BBA Notes

Functions of Financial Institutions

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Financial institutions play a pivotal role in every economy. The central government organization regulates banking and non-banking financial institutions. In addition, these institutions help bridge the gap between idle savings and investment and its borrowers, i.e., from net savers to net borrowers.

Functions of Financial Services

  • Promotes Savings: These services provide different types of convenient investment options that can grow people’s savings. A mutual fund is one such good option where people can invest and earn reasonable returns without much risk.
  • Raises Fund: Financial services serve as an efficient tool for raising funds in an economy. It provides various financial instruments to individuals, investors, corporations, and institutions where they can invest their money thereby raising funds from them.
  • Deployment of Funds: Financial services enable the proper deployment of financial resources into productive means. There are numerous investment avenues and instruments available in the financial market where people can invest their funds for earning income.
  • Economic Growth: Financial services help the government in attaining the overall growth of the economy. The government can easily raise both short-term and long term funds for its various needs. It helps in improving overall infrastructural facilities and employment opportunities in a country.
  • Minimizes Risk: Risk minimization is an important role played by financial services. These services help in diversifying the risk and protect people against damages by providing insurance policies.
  • Proper Utilization of Funds: These intangible services help in efficient allocation of funds. Financial services serve as a means through which peoples invest their ideal lying resources into better investment plans for generating incomes.
  • Enables payment system: Financial services have a key role in the proper movement of funds among peoples. It enables peoples to successfully do their payments without any difficulty. Credit cards, debit cards, bill of exchange, and cheque are such financial instruments which facilitate financial transactions.
  • Maintains Liquidity: Financial services helps in maintaining sufficient funds in an economy. It links the one who is in need of funds and those who can supply funds as they have sufficient savings. Various services like loans and credit cards enable people to acquire needed funds easily.
  • Raises Standard of living: These services play a crucial role in improving the living standards of people. Customers are easily able to purchase costly goods on hire purchase system availing these services. People are able to enjoy the benefits of quality and luxury items.
  • Promotes trade: Financial services promote both domestic and foreign trade in a country. Forfaiting and factoring companies in the financial market promote the export of goods to foreign markets and also the sales of products in the domestic market. In addition to this insurance and banking facilities also support trade activities in-country.
  • Balanced Regional Development: Financial services helps in the balanced regional development of the country. All the key sectors of the economy such as the primary sector, secondary sector, and tertiary sector are able to acquire the required funds through these services. This results in regional disparities and brings balanced development in a country.
  • Improve Employment Opportunities: Generation of employment opportunities is another important function of financial services. Different financial institutions employ a large number of peoples for selling these services. They pay remunerations to their employees out of the profit earned by selling these financial services.
Lucknow University BBA Notes

Nature and Role of Financial institutions

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Financial system is a system that facilitates the movement of funds among people in an economy. It is simply a means through which funds are exchanged between investors, lenders, and borrowers.

A financial system is composed of various elements like financial institutions, financial intermediaries, financial markets and financial instruments which all together facilitate the smooth transfer of funds. This system exists at the regional, national and international levels. It is an efficient tool that helps in economic development of a country by linking savings and investments thereby leading to wealth creation.

Nature of Financial institutions

Mobilizes Saving

It helps in allocating ideal lying resources with peoples into productive means. Financial system is the one which obtains funds from savers and provide it to those who are in need of it for various development purposes.

Transfer Funds

Financial system helps in transferring of financial resources from one person to another person. This system includes financial markets, financial intermediaries, financial assets and services which facilitates fund movements in an economy.

Risk Allocation

Diversification of risk in an economy is important feature of financial system. Financial system allocates people’s funds in various sources due to which risk is diversified.

Facilitates Investment

Financial system encourages investment by peoples into different investment avenues. It provides various income-generating investment options to peoples for investing their savings.

Enhances liquidity

Financial system helps in maintaining optimum liquidity in an economy. It facilities free movement of funds from households (savers) to corporates (investors) which ensures sufficient availability of funds.

Role of Financial institutions

Reduces Risk

It aims at reducing the risk by diversifying it among a large number of individuals. Financial system distributes funds among a large number of peoples due to which risk is shared by many peoples.

Brings Savers and Investors Together

Financial system serves as a means of bridging the gap between savings and investment. It acquires money from those with whom it is lying idle and transfers it to those who need it for investing in productive ventures.

Facilitates Payment Mechanism

Financial system provides a payment mechanisms for the smooth flow of funds among peoples in an economy. Buyers and sellers of goods or services are able to perform transactions with each other due to the presence of a financial system.

Assist in Capital Formation

Financial system has an efficient role in the capital formation of the country. It enables big corporates and industries to acquire the required funds for performing or expanding their operations thereby leading to capital formation in the nation.

Improves Standard of living

It raises the standard of living of peoples by promoting regional and rural development of the country. The financial system promotes the development of a weaker sections of society through cooperative societies and rural development banks.

Facilitates Economic Development

Financial system influences the pace of economic growth or development of an economy. It aims at optimum utilization of all financial resources by investing all idle lying resources into useful means which leads to the creation of wealth.

Lucknow University BBA Notes

Experience Management

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Experience management is an effort by organizations to measure and improve the experiences they provide to customers as well as stakeholders like vendors, suppliers, employees, and shareholders. The concept posits the notion that experiences comprise distinct economic offerings that create economic value and competitive advantage.

Organizations have begun to collect experience data in addition to operational data, since experiences are seen as a competitive advantage. Experience management platforms provide various services to automate the process of identifying and improving experiences across an organization.

Broader than customer experience, experience management now encompasses customer experience along with other areas, such as brand experience, employee experience and product experience, which are all seen as interrelated.

Management

To create and manage the experiences, businesses must evaluate, implement, integrate, and build experiences from a fragmented landscape. Such needs are met by experience management platforms, which help automate the process of measuring and improving experiences across an organization by coordinating content, customer data and core services, and unifying marketing, commerce and service processes.

Experience management platforms compare multiple layers of data and statistics to enable organizations to identify any experience gaps. They connect operational databases with human feedback, analyzing respondents’ emotions, beliefs, and sentiments for a holistic view of the experiences they provide. Their methods include artificial intelligence, predictive analytics, and statistical models.

Other uses

While the term experience management is predominantly used in business, it has another meaning. It is used for a special kind of knowledge management that deals with collecting, modeling, storing, reusing, evaluating, and maintaining experience. In that sense, the term is interchangeable with expertise management.

Importance:

  • Global pandemic has shifted our world to online/virtual: Many of our day-to-day activities including work, shopping, communication, etc. are now done virtually using technology. That means a bad experience can easily result in loss of business. For example, employees that get frustrated from bad experiences at work may consider switching to a new job. Customers who can’t easily navigate your website or access the information they need, for example, will likely consider alternatives from another vendor.
  • Device and app proliferation: A constant increase in device models, OS versions, and applications had led to a more complex environment that organizations need to support. For example, IT needs to support a wide range of device and operating system (OS) combinations across their employee base. An app developer needs to make sure the app works on any device and any OS to retain and increase the customer base. And so on.
  • Consumerization of everything: The expectation for flexibility, choice, and ease of use that originated in consumer-originated technologies has expanded to other areas of our lives, including work style preferences and flexibility.

Working:

Measure: to effectively measure end-user experience, an organization should have the ability to capture both quantitative and qualitative data. Quantitative is normally data collected by systems like:

  • Endpoint management tools that capture data such as device health. For example, how much memory capacity is left on the device or what is the battery life status can impact user experience.
  • Application performance monitoring (APM) tools that capture app crashes, hangs, errors, etc. For example, have the ability to measure how long it takes to perform a single task. These tools also often track how users navigate an app and provide more information about user experience while in the app, such as how easy it is to checkout or identify where users typically drop.
  • Network monitoring tools track the availability, health, and performance of networks. There are many protocols for network monitoring that look at different aspects of network traffic.

In addition to quantitative data, organizations that want to manage experience also need to capture qualitative data to better understand the end-user sentiment and capture issues that might not come up otherwise. There are many surveying tools in the market to capture this data.

Analyze and Visualize: once the data is collected, organizations need a way to analyze and visualize the data, normally this is done through dashboards and reports. Some tools use machine learning models to provide additional, more advanced insights such as experience scores, or identifying when a KPI is outside a normal range. This enables organizations to get visibility into their environment and make data-driven decisions.

Troubleshoot: in case of an issue, organizations should proactively troubleshoot to find the root cause of the issue. In many cases, this is done manually which can be extremely time-consuming and often requires the end-user to be involved in this process. In many cases the amount of data is overwhelming and a more guided approach based on past experience can be useful, for example, in a case where the same issue has happened in the past with another user. Additionally, providing admins with more data in context to the issue at hand can speed up root cause analysis.

Remediation: once a root cause of an issue has been identified, the organization would want to fix it. In some cases, the issue can be solved by the user without intervention from the company, for example, a password reset. Ideally, organizations would want to leverage automation and self-service workflows as much as possible to cut down costs and improve the overall experience.

Organizations that are more advanced in their experience management journey would want to transition from reactive issue detection to a more proactive approach where they can identify issues before the end-user notices or their experience is impacted. Additionally, advanced organizations would provide end users with self-service options, providing more flexibility and reducing costs at the same time.

Features of experience management software

Ticket management

The software allows you to log all customer issues. You can use this data to identify customer needs. The platform avails customized automations and ticket routing.

Products and inventory

The management software has an integrated product data base for ease of tracking. You can identify the products people are buying more and associate particular products with specific customers.

Customer management

This feature allows you to analyze customer data. This includes their contacts, product preferences or locations.

Integration

Experience management software can integrate seamlessly with other business systems, eliminating duplication of effort and tasks. For example, integrating your experience management software with your CRM software enhances coordination, collaboration and productivity across your teams. The software integrates well with business systems thanks to the availability of APIs.

Lucknow University BBA Notes

Strikes, Lockout, Prevention of Strikes

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Section 2 (q) of the Industrial Disputes Act defines:

Strike means a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment.

The following essential requirements for the existence of a strike:

  • There must be cessation of work.
  • The cessation of work must be by a body of persons employed in any industry;
  • The strikers must have been acting in combination;
  • The strikers must be working in any establishment which can be called industry within the meaning of Section 2(j); or
  • There must be a concerted refusal; or
  • Refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment;

They must stop work for some demands relating to employment, non-employment or the terms of employment or the conditions of labour of the workmen.

Types:

  • Recognition Strike:

Typical strike often resulted to pressurize the employer to recognize the value of workers and deal with them.

  • Economic Strike:

When the strike is due to an economic issue, like better pay, bonus, benefits, working hours, and working conditions, it is called an economic strike.

  • Sympathy Strike:

When more employee union join the strike initiated by another union, to support them, it is a sympathy strike.

  • Sit down Strike:

Strike in which the employees strike while remaining at their job in the factory.

  • Wildcat Strike:

When the strike is unauthorized and not supported by the labour union, it is called a wild cat strike.

  • Go-slow Strike:

In this form of strike, workers do not work at normal speed, which is usually regarded as misconduct, rather than strike.

  • Hunger Strike:

A strike in which all or some of the workers fast, is called a hunger strike.

Lockout

Lock-Out means the employer temporarily closes down the factory or any unit of the enterprise, where numerous workers are employed, to handle the uncontrollable situation, till the issues are resolved. It is used to compel the workers to agree and resume the work as per the terms and conditions of the employers.

It may result in a huge loss to both the parties, i.e. management and workers. In fact, frequent lock-outs may lead to the permanent shut down of the factory which leads to the loss of jobs on a large scale.

Lock-Out involves partial or full temporary locking down of the workplace or halting operations or denial by the employer to continue employment, of a certain number of employees with an aim of enforcing demands or showing grievance or to support other employers. It encompasses:

  • Temporary shut down of the factory or unit.
  • The industry is locked out to enforce demand or terms and conditions.
  • Intended to reopen the factory or unit when workers agree to work, as per the demand of the management and also to scale down the worker’s demand.

Strike

Lock-Out
Meaning Strike refers to the suspension of work by the workers or employees, so as to compel the employer, to agree to their demands. Lock-out is when the employer compels the workers to accept his terms and conditions, by shutting down the factory.
What is it? Organized and collective withdrawal of labor supply. Withholding the demand for labor.
Tactic Union power tactic Employer power tactic
Objective To gain redressal of the grievance, or to cause change through it. To gain an advantage by inflicting proprietary rights over the workers.
Used to Initiate or resist change in their working conditions. Force employees to return to work.
Tool of Workers Management

Prevention of Strikes

  • Open Communication Channels:

Foster open and transparent communication between management and employees. Regularly engage in dialogue to address concerns, discuss grievances, and solicit feedback to identify and resolve issues before they escalate.

  • Fair Labor Practices:

Implement fair labor practices, including competitive wages, benefits, and working conditions. Ensure that employees feel valued and respected, and that their contributions are fairly rewarded.

  • Employee Engagement and Participation:

Encourage employee engagement and participation in decision-making processes that affect their work and livelihoods. Involve employees in discussions about workplace policies, practices, and changes.

  • Conflict Resolution Mechanisms:

Establish effective conflict resolution mechanisms, such as grievance procedures, mediation, or arbitration, to address disputes and grievances in a timely and fair manner.

  • Negotiation and Collective Bargaining:

Engage in meaningful negotiation and collective bargaining with labor unions or employee representatives to address issues and reach mutually acceptable agreements on terms and conditions of employment.

  • Invest in Employee Well-Being:

Invest in programs and initiatives that support employee well-being, such as health and wellness programs, work-life balance initiatives, and professional development opportunities.

  • Promote a Positive Work Culture:

Foster a positive work culture built on trust, respect, and collaboration. Recognize and reward employee contributions, promote teamwork, and celebrate achievements to boost morale and job satisfaction.

  • Address Root Causes:

Identify and address the root causes of potential grievances or dissatisfaction among employees. Conduct regular assessments of workplace conditions, policies, and practices to identify areas for improvement.

  • Training and Development:

Provide training and development opportunities to managers, supervisors, and employees on effective communication, conflict resolution, and negotiation skills to equip them with the tools to prevent and manage disputes.

  • Compliance with Labor Laws:

Ensure compliance with labor laws and regulations governing employment practices, wages, hours, and working conditions. Stay informed about legal requirements and uphold ethical standards in all aspects of employment.

Lucknow University BBA Notes

Basic query and report generation in DBMS

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SQL Commands

  • SQL commands are instructions. It is used to communicate with the database. It is also used to perform specific tasks, functions, and queries of data.
  • SQL can perform various tasks like create a table, add data to tables, drop the table, modify the table, set permission for users.

Data Definition Language (DDL)

  • DDL changes the structure of the table like creating a table, deleting a table, altering a table, etc.
  • All the command of DDL is auto-committed that means it permanently saves all the changes in the database.

Commands that come under DDL:

  • Create
  • Alter
  • Drop
  • Truncate

Data Manipulation Language

  • DML commands are used to modify the database. It is responsible for all form of changes in the database.
  • The command of DML is not auto-committed that means it can’t permanently save all the changes in the database. They can be rollback.

Commands that come under DML:

  • Insert
  • Update
  • Delete

Data Control Language

DCL commands are used to grant and take back authority from any database user.

Commands that come under DCL:

  • Grant
  • Revoke

Transaction Control Language

  • TCL commands can only use with DML commands like INSERT, DELETE and UPDATE only.
  • These operations are automatically committed in the database that’s why they cannot be used while creating tables or dropping them.

Commands that come under TCL:

  • Commit
  • Rollback
  • Savepoint

Data Query Language

DQL is used to fetch the data from the database.

It uses only one command:

  • Select

Report generation

A report generator is a computer program whose purpose is to take data from a source such as a database, XML stream or a spreadsheet, and use it to produce a document in a format which satisfies a particular human readership.

Report generation functionality is almost always present in database systems, where the source of the data is the database itself. It can also be argued that report generation is part of the purpose of a spreadsheet. Standalone report generators may work with multiple data sources and export reports to different document formats.

An early report writer was part of the Nomad software.

Information systems theory specifies that information delivered to a target human reader must be Timely, Accurate and Relevant. Report generation software targets the final requirement by making sure that the information delivered is presented in the way most readily understood by the target reader.

Features of Report Generator:

  • For every phase of report generation, the report generator is user-friendly and effective.
  • From numerous sources of data, report generators can easily extract information.
  • Report generator operators with real-time work. The reports are automatically generated after arranging templates and report the frequency of annual, quarterly, monthly, and day to day reports and are sent to the email address that is set.
  • Report generator supports the reuse of templates to generate reports.
  • Printing or exporting of reports is supported by the report generator. The report can be exported or printed in pdf, images, or excel.
  • Users can review the reports anywhere and anytime by their phones with the help of the report generator.

Steps to Generate

Step 1

Open your preferred DBMS. Ensure that the application loads the data from the appropriate database.

Step 2

Navigate to the report writer within your DBMS. Select the tables from the database you wish to report. For example, your database might contain all inventory information but your report might want to pull only the tables that contain damaged and returned inventory.

Step 3

Design the appearance of your report in the “what-you-see-is-what-you-get” (WYSIWIG) report designer window. Insert static text, such as headers and titles, like “Damaged Inventory.”

Step 4

Insert dynamic text. Use the query language of your DBMS to indicate where the report generator should insert the values for specific fields, such as “Serial Number” or “Date Returned.”

Step 5

Preview the report using the report writer in your DBMS. Check that the layout displays properly and that the dynamic text is correct. Make any necessary corrections to the template.

Step 6

Export the report using your DBMS report writer. Save the file in your desired format, such as PDF or XML.

Lucknow University BBA Notes

Diction and Accent

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Diction is one’s choice and use of words and phrases in speech or writing — in other words, almost the same as phraseology (a manner of expression, particularly one that’s characteristic of a particular speaker or writer). It can also mean the style of enunciation (the style of pronouncing words) in speaking or singing.

Diction is:

  • A style of speaking or writing as dependent upon choice of words.
  • The accent, inflection, intonation, and speech-sound quality manifested by an individual speaker, usually judged in terms of prevailing standards of acceptability; enunciation.

Pronunciation/ Accent is simply the way a given word is pronounced (the sound made for that word, and this sound may be in the correct way or something else).

Therefore, diction and pronunciation/ Accent are essentially different things, but they have a certain degree of overlap

Lucknow University BBA Notes

Non-ethnocentricism

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Ethnocentrism in social science and anthropology as well as in colloquial English discourse means to apply one’s own culture or ethnicity as a frame of reference to judge other cultures, practices, behaviors, beliefs, and people, instead of using the standards of the particular culture involved. Since this judgment is often negative, some people also use the term to refer to the belief that one’s culture is superior to, or more correct or normal than, all others especially regarding the distinctions that define each ethnicity’s cultural identity, such as language, behavior, customs, and religion. In common usage, it can also simply mean any culturally biased judgment. For example, ethnocentrism can be seen in the common portrayals of the Global South and the Global North.

Ethnocentrism is sometimes related to racism, stereotyping, discrimination, or xenophobia. However, the term “ethnocentrism” does not necessarily involve a negative view of the others’ race or indicate a negative connotation. The opposite of ethnocentrism is cultural relativism, which means to understand a different culture in its own terms without subjective judgments.

Lucknow University BBA Notes

Reward management

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Reward management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization.

Reward management consists of analysing and controlling employee remuneration, compensation and all of the other benefits for the employees. Reward management aims to create and efficiently operate a reward structure for an organisation. Reward structure usually consists of pay policy and practices, salary and payroll administration, total reward, minimum wage, executive pay and team reward.

Objective

Reward management deals with processes, policies and strategies which are required to guarantee that the contribution of employees to the business is recognized by all means. Objective of reward management is to reward employees fairly, equitably and consistently in correlation to the value of these individuals to the organization. Reward systems exist in order to motivate employees to work towards achieving strategic goals which are set by entities as well as aligning the actions of employees to reflect the culture, aims and beliefs a business or organisation wishes to uphold. Reward management is not only concerned with pay and employee benefits. It is equally concerned with non-financial rewards such as recognition, training, development and increased job responsibility. Ultimately, Reward Management is a tool that uses various types of Employee Motivation to align the strategic and cultural goals of an employee, or group of employees, with the tactical targets set by a business or organisation.

Rewards

Rewards are more about incentives to your employee’s work. It’s just to motivate them towards the work and promote productivity. To encourage more quality work, you offer them rewards.

Benefits

Benefits are most often not built into one’s salary; for example health insurance offered by the company.

Perks

Perks act as a kind of treat to the employees. It is offered to make their work-life more enjoyable and stable. This could be anything like; Chill Fridays, less-stressful Mondays, and so on.

Stock options

Some organizations offer stocks to their employees at a fixed rate for some time. This is again a great way to motivate employees to stick with the organization in the long term.

Recognition programs

Most of the employees would prefer financial rewards for their efforts towards the company. However, some employees seek recognition for their hard work from the organization.

Important:

Mutually beneficial: A reward system is beneficial not only to the employee but also to the organisation. The employee will feel more motivated to work harder by having a reward system in place the employee will feel more committed to their work and their productivity will increase. An increase in productivity will then benefit the organisation. Therefore, a reward system is mutually beneficial to the employee and the organisation.

Absenteeism: A reward system will reduce absenteeism in the organisation. Employees like being rewarded for a job well done and if there is a reward system in place, employees will be less likely to be ringing in sick and not showing up for work. Also, by having a reward system in place the employees will be clearer about the targets and goals of the organisation as they will be rewarded when reach certain targets. So, by having a reward system as an incentive they will be less likely to be absent from work.

Motivation: A reward system will motivate employees by reaching targets and organisational goals in exchange for rewards. A reward system is great at motivating employees but they will also be motivated to prove themselves to the organisation.

Loyalty: A reward system will increase the employee’s loyalty to the organisation. By a reward system being in place the employee feels valued by the organisation and knows that their opinion matters. If an employee is happy with the reward system, they are more likely to appreciate work place and remain loyal to the organisation

Teamwork: The reward system will increase the teamwork spirit in the organisation. The reward system will promote teamwork to the employees. The employees will work together as part of a team to achieve their targets in return for rewards. Teamwork within the organisation will help increase efficiency and create a happier workplace. This is another reason why reward systems are important in business organisations.

Morale: Having a reward system in place providing employees with incentives and recognition will boost their morale. By encouraging employees to meet goals and targets it gives them clear focus and purpose which will their morale. By the employees morale being boosted this will increase the morale of the entire organisation. This is all down to a reward system in the organisation.

Lucknow University BBA Notes

Nature and Scope of Product Pricing Decisions

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Price is the stimulator that converts the procrastination of buyers into the desired choice, that suggests value that moves someone to take certain risks, that encourages them to spend the money to incur shopping and travel costs.

Pricing decisions have an impact on all phases of the Supply/Marketing channels. Suppliers, sales people, distributors, competitors and customers all are affected by the pricing system.

Price also gives a perception of quality. For example, a hotel chain, servicing the tourist package holiday market, will offer cheap prices to its customers. The customers will have a lower expectation of service quality than those offered at full premium price package. Since any offering is merely perceived as a bundle of diverse values, the opposite course, in product choice, is to agree to sacrifice service quality in favour of a lower price.

  1. Price allocates recourses: In a free-market economy and to some extent in a controlled economy, the resources can be allocated and reallocated by the process of price reduction and price increase. Price is used as a weapon, to realise the goals of a planned economy, and to allocate resources towards sectors, which have priority from the planning point of view.
  2. Price is essential to marketing: Price is a matter of great importance to both the buyer and the seller in the market place. In money economy without prices there can be no marketing. Price denotes the value of a product or service expressed in monetary terms. Only when a buyer and a seller agree on the price, does exchange and transfer of ownership take place.
  3. Price determines the general standard of living: Price influences consumer purchase decisions. It reflects the purchasing power of money and thus reflects the general standard of living. The lower the prices in an economy, the greater will be the purchasing power in the hands of the consumer and the higher will be the standard of living.
  4. Price regulates demand: Price is the strongest ‘P’ of the four “Ps” of the marketing mix. The marketing manager can regulate the demand of a product by increasing or decreasing its price. To increase demand, reduce the price and to decrease demand increase the price.

However, as an instrument to control demand, price should be used by those who are familiar with the dangers involved in using price as a mechanism to control demand, as the damage done by improper pricing can ruin the effectiveness of a well-conceived marketing programme.

  1. Price is a competitive weapon: Price is an important weapon to deal with competition. Any company whether it is selling high-, medium- or low-priced products, has to decide as to whether its prices will be above, below or equal to the prices set by the competitors. This is a basic policy issue and affects the entire planning process.
  2. Price is a determinant of profitability: Price influences the sales revenue of a product, which in turn determines the profitability of the firm. Price thus is the basis of generating profits for the firm. A change in the price mix of the marketing mix can be made more easily than a change in any other element of the marketing mix.

Thus, price changes are used more frequently for defensive and offensive strategies of a firm. The impact of price rise and fall is reflected instantly in the rise and fall of the profitability of a product, all other variables remaining the same.

Thus, price is a powerful marketing instrument. Every marketing plan involves a pricing decision. As such all-marketing planners should make accurate and planned pricing decisions.

Scope

Price is the stimulator that converts the procrastination of buyers into the desired choice, that suggests value that moves someone to take certain risks, that encourages them to spend the money to incur shopping and travel costs.

Pricing decisions have an impact on all phases of the supply/marketing channels. Suppliers, sales people, distributors, competitors and customers all are affected by the pricing system.

Price also gives a perception of quality. For example, a hotel chain, servicing the tourist package holiday market, will offer cheap prices to its customers. The customers will have a lower expectation of service quality than those offered at full premium price package. Since any offering is merely perceived as a bundle of diverse values, the opposite course, in product choice, is to agree to sacrifice service quality in favour of a lower price.

Price, of course, is not the only marketing tool available to the formulation of a marketing strategy. The price of money is only one of many interdependent references used to make a purchase that may favour or inhibit purchase. In fact, price often is not the decisive factor. The inherent belief that price is the main determinant of buyer choice, will lead a business to react to any sales-led crisis by discounting to distributors or final customers or both.

Unless sales responds strongly, this strategy will compound disaster, in that continued low sales at the lower price known as price war, will make an even smaller contribution to fixed overheads. But even if a sale goes up, gross margins will remain squeezed and a higher total income cannot be generated.

Worse, the extra sales may be the result of pipeline-filling by the distributors or by final customers stocking up ahead. Such increases may only be temporary, to be later compensated by a downward re-adjustment. Worse still any significant increase in sales that will come at the expense of other suppliers, and is likely to encourage retaliation by the most badly hit competitor. This, in turn, usually leads to a general price war, which quickly drives the weakest suppliers from the market and leaves even the strongest on permanently reduced margins.

In the early 1980s, People Express gained a significant market share in the air travel market through much curtailed prices. Other airlines, as a reaction, cut also their prices in order to maintain passenger loads. The final result was not an increased share of the market for People Express, but was adversely affected, falling into near bankruptcy. The condition deteriorated in 1986, it was taken over by one of its competitors.

A workable marketing strategy must take full account of the following factors, in addition to price:

(i) Perceived quality

(ii) Conforming quality

(iii) Time and place availability costs

(iv) Time expenditure costs

(v) Risk costs

(vi) Learning costs

(vii) Search effort costs

(viii) Design compromise costs.

The market strategy must be planned in terms of the way customers perceived value and react to differing stimuli affecting them.

Lucknow University BBA Notes

Product Management

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Product Management is the business process of planning, developing, launching, and managing a product or service. It includes the entire lifecycle of a product, from ideation to development to go to market. Product managers are responsible for ensuring that a product meets the needs of its target market and contributes to the business strategy, while managing a product or products at all stages of the product lifecycle. Software product management adapts the fundamentals of product management for digital products.

Role of Product Managers

Product managers are responsible for managing a company’s product line on a day-to-day basis. As a result, product managers are critical in both driving a company’s growth, margins, and revenue. They are responsible for the business case, conceptualizing, planning, product development, product marketing, and delivering products to their target market. Depending on the company size, industry, and history, product management has a variety of functions and roles. Frequently there is Profit and Loss (P&L) responsibility as a key metric for evaluating product manager performance.

Tasks

Product managers analyze information including customer research, competitive intelligence, industry analysis, trends, economic signals, and competitive activity, as well as documenting requirements, setting product strategy, and creating the roadmap. Product managers align across departments within their company including product design and development, marketing, sales, customer support, and legal.

Product management was born during the Great Depression when a 27-year-old marketer proposed the idea of a “Brand man” an employee to manage a specific product rather than a traditional business role. Since the 1930s, the continued success of this function has led to the growth of product organizations across industries and geographies.

1931: Neil H. McElroy, a marketing manager at Proctor & Gamble, writes a 300-page memo on the need for “brand men,” who manage specific products.

Late 1930s: McElroy is an advisor at Stanford University, where he influences two young visionaries: Bill Hewlett and David Packard.

1943-1993: Hewlett-Packard sustains 50 years of 20% Y/Y growth by implementing the “brand man” philosophy in their new company.

Late 1940s: Toyota develops JIT manufacturing principles, later adopted by Hewlett-Packard.

1953: Toyota develops the kanban method.

1970s: Tech companies in the U.S. start developing lightweight processes, in opposition to cumbersome processes that emerged from manufacturing industries.

1980s: Developing agile processes, combined with greater acceptance of “Brand management” roles, takes hold in many technology and software companies.

2001: The Agile Manifesto is written, which, in large part, broke down department silos and outdated processes, to make room for a unified product management role.

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