Module 3
Introduction to Marketing
From the time you wake up
Turn off that alarm
brush your teeth
take a shower
have breakfast
Get dressed
travel to work
use the copier
go out for dinner
fall asleep
We use more than 250 brands by the time our day ends !!
Marketing is omnipresent ..!
The Average Person In A Metro-city Is
Exposed To Over 3,000 Advertising
Messages A Day…!!
...Consciously Or Otherwise.
What Can Be Marketed?
• Goods
• Services
• Experiences
• Events
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas
Marketing Definition
Marketing is the management process that identifies,
anticipates and satisfies customer requirements profitably.
The right product, in the right place, at the right time, and at the
right price .
Introduction
➢ Marketing is the key function of management.
➢ Marketing is the business function which deals with customers.
➢ Marketing is responsible for generating revenue & contributing
directly towards growth of the organization.
➢ Marketing covers advertising, promotions, public relations, and
sales.
➢ Finance, operation, accounting & other function will not really
matter if there is not sufficient demand for products & services.
No Single Definition or Approach
But the common subject matters:
– The ability to satisfy customers,
– The identification of favorable marketing
opportunities
– The need to create an edge over competitors
– The capacity to make profits to enable a viable future
for the organization
– The aim to increase market share mainly in target
markets
Marketing Management
 According to Philip Kotler, “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.”
Objectives of Marketing Management
➢Creating New Customers.
➢Satisfying the Needs of Customers.
➢Enhancing the Profitability of Business.
➢Raising the standards of living People.
➢Determining the Marketing Mix.
5 P’s of Marketing
The 5 P’s of Marketing – Product, Price, Promotion,
Place, and People these are key marketing elements
used to position a business strategically.
1. Product
The product or service element refers to what you are offering as
a whole to your customers.
Product decisions include functionality, branding, packaging,
service, quality, appearance and warranty terms.
When thinking about your product consider the key features,
benefits, and the needs and wants of customers.
For example, if you are a food manufacturer you may decide to
add some new flavors to extend your range.
2. Price
The price element refers to the way you set prices for your
products or services.
It should include all the parts that make up your overall cost,
including the advertised price, any discounts, sales, credit terms
or other payment arrangements.
3. Promotions
Promotion refers to all the activities and methods you use to
promote your products/services to your target market.
It includes sales, public relations, direct marketing, advertising,
sponsorship and social media.
4. Place
The place element refers to how you get your product or service
to your customers at the right time, at the right place, and in the
right quantity.
It includes distribution channels (e.g. via a shop front, online or a
distributor), location, logistics, service levels and market
coverage.
5. People
The people element refers to your customers, yourself and your
staff.
You need to consider both your staff and customers if you’re
thinking of growing your business.
It includes understanding what your customers’ needs and wants
are, setting targets and measuring your customer service levels
so that you attract and keep loyal customers.
5 P’s of Marketing Hotel Example
 Although the 5 Ps are somewhat controllable, they are
always subject to your internal and external marketing
environments.
Product – food catering to fussy eaters.
Price – affordable prices for families.
Promotion – advertisements in newsletters.
Place – location and opening hours suited to busy,
family lifestyles.
People – staff that are friendly and accommodating to
the needs of parents and children.
What is a Product?
A product is anything that can be offered to a market to
satisfy a want or need, including physical goods,
services, experiences, events, persons, places, properties,
organizations, information, and ideas.
Product Development Process Steps
Step 1: Idea Generation (Ideation)
Step 2: Product Definition
Step 3: Prototyping
Step 4: Detailed Design
Step 5: Validation/Testing
Step 6: Commercialization
Product Development Process Steps
Product Life Cycle
 According to Philip Kotler :
 “The PLC is an attempt to recognize the distinct stages in
the sales history of the product.”
 According to William J. Stanton :
 “The Product life cycle concept is the explanation of the
product from its birth to death as a product exists in
different stages and in different competitive environments.”
Product Life Cycle
 There are four stages of product life cycle
1. Introduction Stage
2. Growth Stage
3. Maturity Stage
4. Decline Stage
Introduction Stage of the PLC
✓ It is the first stage, wherein the product is launched in the
market with full scale production and marketing programme.
✓ The product is a new one. It means “a product that opens up an
entirely new market, replaces an existing product or
significantly broadens the market for an existing product.
✓ "In this stage sales grow at a very low rate because it is not an
effective demand.
Characteristics
1. Low and slow sales
2. High product price
3. Heavy promotional expenses
4. Lack of knowledge
5. Low profits
6. Narrow product lines
Growth Stage of the PLC
Once the market has accepted the product, sales begin to rise and
product enter it’s 2nd stage.
• The product achieves considerable and widespread approval in
the market. The sales and profit increases at an accelerated rate.
• In this effective distribution, advertising and sales promotion are
considered as the key factors.
Characteristics
1. Rapid increase in sales
2. Product improvements
3. Increase in competition
4. Increase in profits
5. Reduction in price
6. Strengthening the distribution channel
Maturity Stage of the PLC
✓ Market becomes saturated because the household demand is
satisfied and distribution channels are full.
✓ The product has to face keen competition which brings
pressure on prices.
✓ Though the sales of the product rises but at a lower rate.
Profit margin however declines due to keen competition.
Characteristics
1. Sales increases at decreasing rate
2. Normal promotional expenses
3. Uniform and lower prices
4. Product modifications
5. Dealer’s support
6. Profit margin decreases
Decline Stage of the PLC
✓ This is the final stage, sooner or later actual sales begin to fall
under the impact of new product competition and changing
consumer behaviour.
✓ The sales and profits fall down sharply and the promotional
expenditure has to be cut down drastically.
Characteristics
1. Rapid decrease in sales
2. Further decrease in prices
3. No promotional expenses
4. Suspension of production work
Importance of PLC
1. It is helpful in sales forecasting.
2. Helpful as a predictive tool.
3. It is Helpful as a planning tool.
4. Helpful as a control tool.
5. Helps in framing marketing programme.
6. Helpful in price determination.
7. Development of new product.
8. Comparison of different products
Factors Affecting PLC
1. Rate of technological change.
2. Rate of market acceptance.
3. Competitor’s entry.
4. Economic and managerial forces.
5. Risk bearing capacity.
6. Government policy.
Promotion
 Anything that is offered to the market for attention,
acquisition, use or consumption that satisfies a want or a
need.
Promotion Mix
Objectives of Promotion
Marketing Strategy
 Introduction
➢ Marketing strategy is a process of using the marketing mix to
satisfy and attract consumer to make a profit for the
organization.
➢A/C to “Philip Kotler”- “Marketing Strategy is define as a set
of objectives, policies, rules that guide over a time for
marketing effort of the firm”.
➢Marketing strategy is a particular procedure used by the seller
to achieve a marketing goal.
WHY MARKETING STRATEGY IS NECESSARY
1.Systematic futuristic thinking by management
2.Better co-ordination of company efforts
3.Development of better performance standards for control
4.Sharpening of objectives and policies
5.Better prepare for sudden new developments
6.Managers have a vivid sense of participation
Steps in Market Strategy
1. Analyze market
 The first step in marketing strategy & marketing planning is to analyze,
study, understand & evaluate the market for the product or service being
considered. The market potential, target market, product need and the
feasibility can be understood.
2. Analyze competition
 The second step in marketing strategy is to analyze the existing competitors
as well as potential competitors, and also any indirect competitors. Without
competitive analysis, the marketing would remain incomplete.
Understanding competition will give insights into the product and pricing
strategies which are currently present in the market.
3. Marketing Research
 The next step is to have a comprehensive marketing research to understand
the demand, customer needs etc. This would include speaking with the end
customers, surveys and analyzing the results to derive the customers needs
and behavior.
4. Define marketing mix
 The fourth step in marketing strategy involves defining strategies about
product, price, place, promotion etc. This is a time tested framework which
has helped formulate the marketing strategy.
5. Financial analysis
 The next step is to evaluate and forecast the financials based on sales
forecasting to the target market. Any marketing research or analysis is
incomplete without understanding the financial impact and implications. It
helps in understanding the revenue potential, profitability and viability of
company and the market.
6. Review and revise
 A continuous revision of marketing strategies is required as it is a
continuous process. The strategy once has to be constantly revised and
improved to cater to changing customer behavior and market dynamics.
7. Understand customers
 The most important step in any marketing strategy is to constantly
understand customer needs & requirements and adapt business
accordingly.
E-Marketing
 eMarketing is the process of marketing a brand using the
Internet. It includes both direct response marketing and
indirect marketing elements and uses a range of technologies
to help connect businesses to their customers.
E-Marketing
 Public Relation
 Sales promotion.
 Brochure ware.
 Direct selling.
 Customer relationship marketing.
 Market research.
 Managing supplier relationships.
Advantages of E-Marketing
 Selling goods and services online.
 Additional customer service.
 Saving overhead costs.
 Exciting and sizzling means of visual impact.
 Every hit could gain a potential customer.
 Print and mailing costs are lower.
 Reduction in order processing and handling costs.
 Enhanced after sales service.
 Distribution of digital products via the web.
 Get closer to the customer.
Financial Management
Introduction
➢ Finance is the key element that helps in running any business.
➢ But finance is a limited resource. However, the wants will
always remain unlimited.
➢ It is necessary that we manage the finances effectively so that our
wants are fulfilled as well as we do not run out of finance.
➢ A business should utilize and invest the finances in such a
manner that the ROI is higher as compared to the amount
invested.
➢ Basically, we can say financial management is the process that
involves the judicious utility of capital as well as a vigilant
selection of the capital source that helps in the accomplishment
of business goals.
 According to Ezra Solamn “Financial management is concerned with
the efficient use of an important economic resources viz capital
funds”.
 Financial Management means planning, organizing, directing and
controlling the financial activities such as procurement and
utilization of funds of the enterprise.
 Scope of Financial Management
➢ Estimating financial requirement
➢ Deciding capital structure
➢ Selecting a source of finance
➢ Selecting a pattern of Investment
➢ Proper cash management
➢ Implementing financial controls
➢ Proper use of surpluses
Meaning of Finance
➢ Finance may be defined as the art and science of managing
money. It includes financial service and financial
instruments.
➢ Finance also is referred as the provision of money at the
time when it is needed. Finance function is the procurement
of funds and their effective utilization in business concerns.
Finance within an Organization
Areas of Finances
Finance as taught in universities is generally divided into three areas:
 Financial management(Corporate Finance),
 Capital markets,
 Investments.
 Corporate finance focuses on decisions relating to how much and what
types of assets to acquire, how to raise the capital needed to buy assets, and
how to run the firm so as to maximize its value.
 Capital markets relate to the markets where interest rates, along with stock
and bond prices, are determined.
 Investments relate to decisions concerning stocks and bonds and include a
number of activities:
(1) Security analysis
(2) Portfolio theory
(3) Market analysis
Objectives of Financial Management
 Profit Maximization
 Wealth Maximization
 Maintenance of Liquidity
 Proper Estimation of Financial Requirements
 Proper Mobilization
 Proper Utilization of Financial Resources
 Improved Efficiency
 Meeting Financial Commitments with Creditors
 Creating Reserves
 Decreases the Cost of Capital
Types of Finance
Role of Finance in a Typical Business Organization
Board of Directors
President
VP: Sales
VP: Finance
Treasurer
VP: Operations
Controller
Credit Manager
Cost Accounting
Inventory Manager
Financial Accounting
Capital Budgeting Director
Tax Department
Liquidity and Working Capital Management
 Liquidity - Ability to convert assets into cash or to obtain
cash to meet short-term obligations.
 NEED FOR LIQUIDITY
▪ Day to day transactions
▪ Precautionary balances
▪ Compensating balances
▪ Obtaining discounts
▪ Acid tests
▪ Favourable opportunities
▪ Overall avoiding bankruptcy!
Overview of Financial Reporting
Tools of Financial Analysis and Control
 Financial Analysis is defined as being the process of identifying
financial strength and weakness of a business by establishing relationship
between the elements of balance sheet and income statement.
 The financial statements are: Income statement, balance sheet,
statement of earnings, statement of changes in financial position and the
cash flow statement.
TOOLS OF FINANCIAL STATEMENT ANALYSIS
An assortment of techniques is employed in analyzing financial statements.
They are:
➢ Comparative Financial Statements,
➢ Statement of changes in working capital,
➢ Common size balance sheets and
➢ Income statements,
➢ Trend analysis and
➢ Ratio analysis.
Balance Sheet
 What is a balance sheet ?
 A list of all the assets and liabilities of a business
 An asset is anything owned by a business which has value
e.g. machinery or premises
 A liability is anything owed by the business e.g. a loan, or an
overdraft
 A balance sheet is produced on one particular day at the end
of the company’s year – it is a snapshot of all the assets and
liabilities on that day
Purpose of a Balance Sheet
 Provides financial information to those loaning money to the
business plus investors, possible lenders, customers and
suppliers
 Shows how money is being used and what assets it has been
spent on
 Note the term balance sheet – this is because the total amount
of assets must equal the liabilities
Components of Balance Sheet
 Fixed assets – assets owned by the business which will be
kept for longer than one year
 Current assets – assets used within one year
 Current liabilities – debts to be paid within one year
 Share capital – money paid into the business for shares
 Reserves – money retained to be re-invested in the business
 Profit and loss – net profit from the profit and loss account to
be added to reserves
Elements of Balance Sheet
Elements [Key Components] of a Balance Sheet.
A balance sheet, also called the statement of financial position.
$ IN
$ OUT
• Assets
• Liabilities
• Owners Equity
Assets
 Assets are valuable resources that are owned by a firm. They
represent probable future economic benefits and arise as the result
of past transactions or events.
Classification of Assets:
 Fixed assets have over twelve months of future use. Assets like
properties and equipment are called fixed assets.
 Current assets have less than twelve months of future use. Tangible
assets like cash or goods for sale that can easily (i.e. within an
accounting year) be converted into cash are called current assets
 Tangible assets are physical such as land, buildings, a
manufacturing plant, computers or cash in the bank. and
equipment.
 Intangible assets are non physical and examples include goodwill,
brands, patents and copyrights
Classification of Assets
Liabilities
 Liabilities are present obligations of the firm. They are
probable future sacrifices of economic benefits which arise as
the result of past transactions or events.
 There are two types of liabilities:
Current Liabilities need to be paid within one accounting
year. Examples are: Outstanding rent, goods bought on
credit.
Long Term Liabilities are those liabilities which will not
be paid during the current accounting year. Examples are:
Long term debts, bank loans.
Classification of Liabilities
Owner’s Equity
 Equity is the ownership interest. This is normally in the form
of investment in shares of a business
 Owner’s Equity is by definition the difference between the
Assets of a company and its Liabilities.

Owner’s Equity is the sum of two parts:
Contributed Capital is the money that the owners
invested in the company.
 Retained Earnings are those earnings which were not
distributed to the owners. These can accumulate to a large
sum over the years.
 Financial accounting is based upon the accounting equation.
 Assets = Liabilities + Owners' Equity
 This is a mathematical equation which must balance. If assets total
Rs.300/- and liabilities total Rs.200/- then owners' equity must be Rs.100/GENERIC BALANCE SHEET
Assets
Liabilities and Owner’s Equity
Cash
Accounts payable
Accounts Receivable
Wages payable
Inventory
Short-term debt
Property, Plant, Equipment
Long-term debt
Common stock
Total Assets
Retained earnings
Total Liabilities and Owners Equity
Balance Sheet Problems
 As on 31st of march the following details have been
recorded for a particular company construct the balance
sheet
Cash
Accounts receivable
Accounts payable
Notes Payable
Owners Equity
Inventory
Equipment
5,000
7,000
8,000
2,000
19,000
10,000
7,000
Balance Sheet
Assets
Liabilities and Owners’ Equity
Cash
5,000
Accounts receivable 7,000
Inventory
10,000
Equipment
7,000
Total assets
29,000
Liabilities
Accounts payable
Notes payable
Total liabilities
Owners’ equity
Total liabilities and
owners’ equity
8,000
2,000
10,000
19,000
29,000
Balance Sheet Problems
 As on 31st of march the following details have been recorded
for a particular company construct the balance sheet
Cash
Accounts receivable
Accounts payable
Notes Payable
Inventory
Equipment
H Jacobs capital
33,000
12,000
30,000
20,000
30,000
25,000
50,000
Balance Sheet
Assets
Cash
Accounts receivable
Inventory
Equipment
Total assets
Liabilities and Owners’ Equity
33,000
12,000
30,000
25,000
100,000
Liabilities
Accounts payable
Notes payable
Total liabilities
H.Jacobs, capital
Total liabilities and
owners’ equity
30,000
20,000
50,000
50,000
100,000
Balance Sheet
January 31, 2000
Assets
Cash
$ 32,500
Accounts receivable 4,400
Prepaid rent
11,000
Inventory
27,800
Equipment
27,792
Total assets
$100,492
Liabilities and Owners’ Equity
Liabilities
Accounts payable $ 30,000
Unearned revenue
50
Utilities payable
120
Interest payable
133
Notes payable
20,000
Total liabilities
50,303
H.Jacobs, capital
50,189
Total liabilities and
owners’ equity
$100,492
Profit & Loss (P&L) Statement
 The profit & loss (P&L) statement is one of the three
primary financial statements used to assess a company’s
performance and financial position (the two others being
the balance sheet and the cash flow statement).
 The basic equation on which a profit & loss statement is
based is
Revenues – expenses = net profit.
Major line items found in P&L Statement
P&L statements generally follow this format:
 -- Revenues
 – Operating (variable) expenses
 = Gross profit (operating) margin
 – Overhead (fixed expenses)
 = Operating income
 +/– Other income or expense (non-operating)
 = Pre-tax income
 – Income taxes
 = Net income (after taxes)
 Sales revenue----A
 Expenses ----- B (Includes Raw material, Labor charges,
over head charges )
 Profit -------------------C
C=A-B
 Interest -----------------D
 Profit before tax-------E
E=C-D
 Tax --------------------F
% of E
 Profit after tax---------G
G=E-F
 Dividend ---------------H
 Retained Income ------I
I=G-H
Profit and Loss Problems
 A company has recorded the following details in the year
2018 construct the profit and loss statement
Sales revenue
1,00,000
Cost of goods sold
20000
Salaries
10000
Rent
10000
Utility
5000
Depreciation
5000
Interest expenses
10000
Retained Income
900
Tax
10000
• Solution
Total revenue A=1,00,000
Cost of goods sold B =20,000
Profit C = A-B Gross profit
C = 100000-20000=80000GP
Operating expenses E = C-D
Operating Profit E = 80000-30000= 50000
Interest = 10000
F=E- Interest =50000-10000=40,000
Income tax= 40000-10000=30,000
Retained income =30000-900=29100
Net Profit = 29,100
Profit and Loss Problems
 A company has recorded the following details in the year
2018 construct the profit and loss statement
Total revenue
Expenses
10,00,000
4,00,000
Depreciation 1,50,000
Interest
Tax
1,20,000
@30%
Company wants to distribute 20% of what it finally gains as
dividend and retain the rest
• Solution
Total revenue A=1000000
Expenses B =400000
Profit C = A-B Gross profit
C = 1000000-400000=600000 GP
Depreciation(operating expenses ) E =C-D
E = 600000-150000= 450000
Interest = 120000
F=E- Interest = 450000-120000=3,30,000
Tax at 30% of F= 30/100*330000=99000
20 % of dividends = 20/100*99000=19800
Retained income = 99000-19800 = 79200
Working Capital
 Working capital typically means the firm’s holding of current
or short-term assets such as cash, receivables, inventory and
marketable securities.
 These items are also referred to as circulating capital
 Corporate executives devote a considerable amount of
attention to the management of working capital.
 Working Capital = Current Assets – Current Liabilities
International Finance
 International Finance is the process of transferring fund from
surplus economic unit to deficit economic unit when any of
these units is located outside a national country.
 International finance is the branch of economics that studies the
dynamics of exchange rates, foreign investment, and how these
affect international trade.
Functions of International Finance
 International Finance basically do the following things for a Multinational
Corporation and for the government.
 Financial Planning in international aspects
 Identification of Sources of Financing Globally
 Analyzing and Selecting of Global Sources of Financing
 Raising of Funds for the organization
 Identification of the scopes of International capital budgeting/Investment of
Funds/Utilization of Fund
 Protection of Funds
 Dealing with the foreign Exchange/Export/Import business
 Distributions of Profit
 Currently, international finance is dealing with matters related to globalization,
fair trade, multinational banking.
 International finance also tries to solve the problem of human resource
exploitation carried out by MNCs in the poor and developing countries by
applying its own principles
Benefits of International Finance
 Access to global capital markets across the world enables a country to
borrow during tough times and lend during good times.
 It promotes domestic investment and growth through capital import.
 Worldwide cash flows can exert a corrective force against bad
government policies.
 It prevents excessive domestic regulation through global financial
institutions.
 International finance leads to healthy competition and, hence, a more
effective banking system.
 It provides information on the vital areas of investments and leads to
effective capital allocation.
 International finance promotes the integration of economies, facilitating
the easy flow of capital. The free transfer of funds would eventually result
in more equality among countries that are a part of the global financial
system
Types of Taxes
GST
 GST stands for Goods and Service Tax.
 Its an indirect tax other than the income tax.
 Its charges on the value of the service or product sold to a
customer.
 The customer/clients pays the GST and the seller deposits the GST
with the Goverment.
 Some countries have sales, service tax with works more or less the
same as GST.
The taxes that GST replaces
 The GST replaces numerous different indirect taxes such as:
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Central Excise Duty
Service Tax
Countervailing Duty
Special Countervailing Duty
Value Added Tax (VAT)
Central Sales Tax (CST)
Octroi
Entertainment Tax
Entry Tax
Purchase Tax
Luxury Tax
Advertisement taxes
Taxes applicable on lotteries.