88226967 marketing finance
TRANSCRIPT
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Marketing Finance
PGDM/MMS (Marketing)
Semester III (2010-12)
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Marketing Finance: Sya!"s
I: S#$%S &%'%%:Saes &e*en"e as an integra eement +, c+st an
re*en"e . In*estment Frame+rk !y &M .
Management +, Saes &e*en"e . #naysis +,
re*en"e !y Pr+"cts errit+ries 3annes
"st+mers rers etc5 . #naysis +, marketing
c+sts !y tyes +, c+sts !y ,"ncti+ns signi,icance
+, marking c+st a+cati+n ,+r manageriaecisi+ns an its imitati+ns5
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Sya!"s
8 II : M#&9%IG I'%SM%:8 Management +, #cc+"nts &ecei*a!es anIn*ent+ries - reit Decisi+ns an reit P+icy- Secia Pr+m+ti+n an Marketing &esearc3
%enit"re . Marketing In*estments an t3eire*a"ati+n "sing t3e r+!a!iity t3e+ry anDecisi+n rees - %*a"ating &et"rn +nMarketing In*estment . De*e+ing ana"nc3ing ne r+"cts an t3e +ncet +,In*estment in $i,e yce +, Pr+"ct - #icati+n+, DF an inear r+gramming t+ e*a"atein*estments in r+"ct e*e+ment anmarketing r+"ct mi5
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Sya!"s8 III : P$I; D%ISIS #D M#&9%IG
FI#%:8 Pricing +, Fair Price S"!mitting +,teners ) . aicati+n +, DF tec3ni?"es t+!"geting . De*e+ing s"!-!"gets !y
marketing segments . #*ertising ="gets .="geting Saes F+rce %,,+rts . tim"m e*ean a+cati+n ,+r seing e,,+rts am+ng eaers .@@
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Sya!"s
8 @@De*e+ing c+maris+n ans ,+r saes ,+rce. !"geting sames . Bare3+"sing ecisi+ns .rans+rtati+n ecisi+n . Dei*ery &+"teecisi+ns . +st anaysis ,+r istri!"ti+n
aternati*es - Financia anaysis ,+r sitc3ing+*er ,r+m s+e seing agency t+ irect seing t+trae c3anne - imact +, marketing strategies+n +rganisati+na str"ct"re an esignc+nse?"ent ,inancia imicati+ns - +ncet +,
marketing c+st an *a"e . meas"ring *a"eae !y marketing e,,+rt5
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Sya!"s8 I':P&IIG D%ISIS:
8 arget Pricing . Pricing +, "rnkey Pr+
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O#her Re(erences ) *e&si#es8 153tt://5marketingteac3er5c+m/ess+n-st+re/,inance8 25 5!estmarketingtet!++k5c+m (Be!site +, t3e
#"t3+rs: #r"n 9"mar an 5Meenaks3i)8 75 3tt://5i!e,5+rg/3+me5as (Inia =ran %?"ity
F+"nati+n)E8 45 3tt://5iniac+re5c+m/ine53tm (Inia +re5c+m .
In,+rmati+n +n Inian In,rastr"ct"re an c+re sect+rs)8 A5 3tt://53ig3!eam5c+m/ (ig3 =eam &esearc3 .
&esearc3 artices +n *ari+"s +ics ,r+m *ari+"ss+"rces)
8 65 3tt://kn+5g++ge5c+m/k (#rtices +n *ari+"s
t+ics !y eerts ,r+m a +*er t3e +r)8 5 3tt://5ign+"5ac5in/re*yraers/y?Haers53tm("esti+n Paers +, IG)
http://www.marketingteacher.com/lesson-store/http://www.bestmarketingtextbook.com/http://www.ibef.org/home.aspxhttp://www.indiacore.com/index.htmlhttp://www.highbeam.com/http://knol.google.com/khttp://www.ignou.ac.in/prevyrpapers/pyq_papers.htmhttp://www.ignou.ac.in/prevyrpapers/pyq_papers.htmhttp://knol.google.com/khttp://www.highbeam.com/http://www.indiacore.com/index.htmlhttp://www.ibef.org/home.aspxhttp://www.bestmarketingtextbook.com/http://www.marketingteacher.com/lesson-store/ -
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O#her Re(erences ) *e&si#es8 J5 3tt://5marketing+er5c+m/Pages/e,a"t5as
(#merican Marketing #ss+ciati+n)8 K5 3tt://5irect-marketing-ass+ciati+n-inia5+rg/
(Direct Marketing #ss+ciati+n- Inia)8 105 3tt://5rmai5in/ine53tm (&"ra Marketing
#ss+ciati+n +, Inia)8
115 3tt://5anmanc+ns"ting5c+m/icmr/ine53tm(Inian +"nci ,+r Market &esearc3)8 125 3tt://5icrier5+rg/ine53tm (Inian +"nci ,+r
&esearc3 +n Internati+na %c+n+mic &eati+ns)8 175 3tt://5imr!int5c+m/ (Inian Market &esearc3
="rea" - IM&= Internati+na)8 145 3tt://5marketresearc3inia5+rg/ine53tmL ="siness De*e+ment ="rea" (Inia) P*t5 $t5
http://www.marketingpower.com/Pages/default.aspxhttp://www.direct-marketing-association-india.org/http://www.rmai.in/index.htmlhttp://www.planmanconsulting.com/icmr/index.htmlhttp://www.icrier.org/index.htmhttp://www.imrbint.com/http://www.marketresearchindia.org/index.htmlhttp://www.marketresearchindia.org/index.htmlhttp://www.imrbint.com/http://www.icrier.org/index.htmhttp://www.planmanconsulting.com/icmr/index.htmlhttp://www.rmai.in/index.htmlhttp://www.direct-marketing-association-india.org/http://www.marketingpower.com/Pages/default.aspx -
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Ine t+ +icsS$+ No+ Name o( Topic S$i!e N'm&ers
, Mar-e#in% Finance an O.er.ie/ ,, ),0
1 Ro$e o( Mar-e#in% Dep#+ in Mar-e#in%Finance2 In#er!epen!ence o( Financean! Mar-e#in%
,3 ,4
0 In.en#or Mana%emen# an! Con#ro$ In#ro!'c#ion ,5 11
3 Acco'n#s Recei.a&$es Mana%emen#
*or-in% Capi#a$ Mana%emen#
10 61
60 65
7 Mar-e#in% Research 89 49
6 "ro!'c# "$annin% an! De.e$opmen#2"ro!'c# Li(e Cc$e2 E.a$'a#ion o(Bran!s E$imina#ion o( "ro!'c#s
4, ,17
8 Cos# ana$sis in Mar-e#in% Decisions ,16),37
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Ine t+ +ics@c+nt5
4 Mar%ina$ Cos#in% an! Brea-)e.enAna$sis
,36 ,66
5 "ricin% ,68 ) ,87
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$earning !
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$earning !
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$earning !
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$earning !
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Mar-e#in% Finance an O.er.ie/
Ac#i.i# Ana$sis:Pr+"ct an rae 3anne:
#rea Pers+n Peri+
Cos# Ana$sis:
Fie +st 'aria!e +st
+ta +st:
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;a$'e Ana$sis: S+cia +st =ene,it #naysisE
Marketing 'a"e #e5
B'!%e#ar Ana$sis:
&es+nsi!iity="geting (+st&e*en"e an Pr+,itentres)
#cti*ity ="geting
#n
Pr+gram ="geting
Peri+ ="geting:
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"ricin% Ana$sis :
"ro(i#a&i$i# Ana$sis:
&et"rn +n Saes (&S)E
&et"rn +n In*estment (&I)
&esae Price Management C+int an =y Pr+"ct
PricingE&I Pricing:
+st P"s Pricing
%+rt Pricing
$ane +st Pricing
+ntri!"ti+n Pricing
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&+e +, Mktg5 Det5 in Marketing Finance
(MF)
8 Re.ie/ Mktg5 +!
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&+e +, Mktg5 Det5 in MF
8 3ese may !e ea!+rate in i,,erent +rs:
Sec"re t3e !est +ssi!e rices ,+r t3e r+"ctEIenti,y segments +, markets 3ic3 i yie
3ig3 r+,it c+ntri!"ti+n an try t+ increase saesE
timise marketing c+stsE
Increase Saes &e*en"e er r"ee +,eenit"re +, #*ertising an Saes Pr+m+ti+nE
Increase Saes &e*en"e er Saes-aE
Increase t3e !ene,its reaise er r"ee +,eenit"re +, M&E
Pan t3e B re?"irement in terms +, In*ent+ry +,FG an &ecei*a!es5
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Mktg5 an Finance . Intereenence
8 3ese t+ eartments 3a*e a erenniac+n,icts +, interest5
8 Finance Det5 3as t+ "nerstan t3e
c+m"si+ns +, t3e Mktg5 eartment in itse,,icient er,+rmanceE
8 3e Mktg5 et5 as+ 3as t+ "nerstan t3ec+m"si+ns +, t3e Finance Det5 t+ s3+
+tim"m ret"rns +n t3e In*estments mae58 F+r eame@@
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Mktg5 an Finance . Intereenence
8 3e *eraing areas:
Intr+"cti+n an +erati+n +, an e,,ecti*e="getary +ntr+ System in Mktg5E
Pr+"ct Panning inc"ing Pr+"ct seecti+nretenti+n an a!an+nment as e as i"ti+n inr+"ct +rt,+i+E
Pr+"ct ricing inc"ing !+t3 s3+rt-range an+ng-range ricing +icies an strategiesE
Mktg5 in*estment ecisi+ns inc"ingmaintaining t3eir imementati+n it3 s"ita!e,ee-!ack +riente c+ntr+ systems5
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Mktg5 an Finance . Intereenence
%*a"ati+n +, Mktg5 Per,+rmance inc"ing !+t3genera an seci,ic Mktg5 ,"ncti+nsE
+ntr+ +, Mktg5 erati+ns . !+t3 t3e
em+yment +, ,"ns an t3e c+st +, in"tsan
F"ncti+na +st #naysis t+ ac3ie*e c+ste,,ecti*eness an as+ ,+r eercising a
systematic an meaning," c+ntr+ +*er Mktg5c+sts an eenses5
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In*ent+ry Management an +ntr+
8 In*ent+ry : &M BIP an FG
8 $e*e +, In*ent+ry is a,,ecte !y SaesPr+"cti+n an %c+n+mic c+niti+ns
8 In*ent+ry is t3e east i?"i +, t3e "rrent #ssets. s+ s3+" r+*ie t3e 3ig3est yie t+
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In*ent+ry Management an +ntr+
8 Firms s3+" ,in t3eir >&ig3t am+"nt t+ !ein*este in in*ent+ry .neit3er >+*er in*estmentn+r >"ner in*estment5
8 Finance Manager (FM) may 3a*e irect c+ntr+
+*er as3 Management an marketa!esec"rities
8 +ntr+ +*er In*ent+ry +icy is generays3are !y FM it3 t3e Pr+"cti+n Manager an
Marketing Manager (MM)8 P+icy +, #cc+"nts &ecei*a!e is s3are !y FMit3 MM
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In*ent+ry Management an +ntr+
8 + !asic c+sts ass+ciate it3 In*ent+ry : 3earrying +sts ( Interest +n ,"ns tieare3+"se sace ins"rance remi"m materia3aning eenses risk +, +!s+escence +r
eris3a!iity rai rice c3anges)) an t3erering +sts ( c+st +, +rering an r+cessingin*ent+ry int+ st+ck)
8 Im+rtant tec3ni?"es +, in*ent+ry management:
#= #naysisE#geing Sc3e"e an +-!in SystemE C"st in time (CI)5
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In*ent+ry Management an +ntr+
Decisi+n +n In*ent+ry e*e is !ase +n t3eSaes ,+recast r+"cts man",act"re !"sinessscenari+ an +*era +icy +, t3e c+many5
3ere is a trae-+,, !eteen t3e e*e +,
in*ent+ry an e,,ecti*e ,"ncti+ning +, t3e+rganisati+n5
#= #naysis: #n e,,ecti*e t++ +, in*ent+ryc+ntr+5 3r+"g3 #= anaysis eac3 item +,
in*ent+ry is categ+rise as # = +r eening+n its reati*e im+rtance
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In*ent+ry Management an +ntr+
&M: ="k isc+"nts +er +rering/trans+rt c+st
.s+ re"ce in*ent+ry carrying c+st ess risk +,
eteri+rati+n +r +!s+escence re"ce st+rage
sace an ess 3aning an ins"rance c+stE@@5
BIP: Sa,eg"ar against mac3ine !reak+ns
%c+n+mic r+"cti+n r"ns an +er mac3ine
setting c+sts .s+ re"ce in*ent+ry carryingc+sts an m+re e!+ r++m in t3e ,act+ry
remisesE
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In*ent+ry Management an +ntr+
+m+nent arts/c+ns"ma!es: Sm++t3 an"ninterr"te r+"cti+n r"ns .s+ re"cein*ent+ry carrying c+stsE
FG : =etter c"st+mer satis,acti+n an a cearincenti*e t+ saes eartment .s+ re"ce
in*ent+ry carrying c+sts ess risk +, eteri+rati+n+r +!s+escence an re"ce st+rage saceE
Packing materias: =etter reainess ,+r t3e saeset5 .s+re"ce in*ent+ry c+sts an r+tecti+n
against eteri+rati+n5
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#cc+"nts &ecei*a!es Management
8 De,ine >#cc+"nts &ecei*a!e- De!t +e t+ t3e,irm !y c"st+mers res"ting ,r+m saes +, g++s+r ser*ices +n creit in t3e +rinary c+"rse +,!"siness5 (Part +, m+ern c+metiti*een*ir+nment)
8 Firms se g++s +n creit t+ ac3ie*e t3e saestargets an kee t3e saes gr+ing5 3e as+inc"r s+me eenses +n creit saes5
8 reit eri+ etene !y t3e ,irms is a +icyecisi+n5
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#cc+"nts &ecei*a!es Management
8 &ecei*a!es reresent an im+rtant ma
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#cc+"nts &ecei*a!es@!
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#cc+"nts &ecei*a!es@!
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#cc+"nts &ecei*a!es@!
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#cc+"nts &ecei*a!es: reit P+icy
8 3e im+rtant imensi+ns +, a ,irms creit +icy are:reit StanarsE reit Peri+E as3 Disc+"nt
an +ecti+n Pr+gramme5
reit Stanars: riteria a+te !y a ,irm t+ eten
creit t+ c"st+mers5"antitati*e !asis ,+r setting stanars: reitratings creit re,erences #*5 +ecti+n Peri+(#P) an ,inancia rati+s5
Stanars may !e : (i) tig3t +r restricti*e (ii) i!era +rn+n-restricti*e5
3e trae-+,, is it3 c+ecti+n c+st e*e +, saes#P an e*e +, !a e!t +sses5
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#cc+"nts &ecei*a!es: reit P+icy
- reit Stanars
8 %ame: Firms saes :&s5 100 mn5 "st+mers arerate 1 t+ 4 in escening +rer5 1 an 2 en
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#cc+"nts &ecei*a!es: reit P+icy
- reit Stanars
8 #nser:8 3e e,,ect +, reaing creit stanars +n r+,it may
!e estimate !y "sing t3e ,+rm"a:
&I O QS(1-') - !nSR(1-t) - kI
B3ere &I O 3ange in &esi"a Inc+me ES O increase in saesE ' O rati+ +, *aria!e c+sts t+
saesE !n O !a e!t +ss rati+ +n ne saesE
t O ta rateE kO +st ta c+st +, caita an
IO Increase in recei*a!es in*estment5(OS#P'/760)
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#cc+"nts &ecei*a!es: reit P+icy
- reit Stanars
&I O QS(1-') - !nSR(1-t) - kI
&I O Q(1Amn5 0520) . 05101Amn5R(1-054)
. 0510(1Amn540/76005J0)
O &s5 66665
Since t3e imact +, c3ange in creit stanars +n
&esi"a Inc+me is +siti*e t3e r++se
c3ange is esira!e5
06/04/12 7J
# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy- reit Peri+
reit Peri+: $engt3 +, time a+e t+ c"st+mers
t+ ay ,+r t3eir "rc3ases5 $engt3ening +, t3eeri+ "s3es saes " attracting ne c"st+mers5&e?"ires arger in*estments in recei*a!es anincience +, !a e!ts +sses5 S3+rtening +, t3eeri+ i 3a*e t3e ++site e,,ect5
%ame: # ,irm +,,ers 70 ays creit t+ its c"st+mers,+r t3e resent e*e +, saes +, &s5 A0 mn5 +st+, caita is 10 N an t3e rati+ +, *aria!e c+sts t+saes is 05JA5 3e ,irm is c+nsiering etening its
creit eri+ t+ 60 ays 3ic3 is ikey t+ "s3 saes" !y &s5 A mn5 3e !a e!t r++rti+n +naiti+na saes +" !e J N5 3e ta rate is 40N5B3at is t3e e,,ect +, engt3ening t3e creit eri+
+n t3e &esi"a Inc+me +, t3e ,irm
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#cc+"nts &ecei*a!es: reit P+icy
-reit Peri+
#nser:
&I O Q
S(1-') - !n
SR(1-t) - k
IB3ere I O (#Pn. #Po)(So/760)
T '#Pn?S/760
#Pn O e a*5 +ecti+n eri+
#Po O a*5 +ecti+n eri+
So O Present e*e +, saes
(3ange in &ecei*a!es In*estment O Incrementain*estment in recei*a!es ass+ciate it3 eistingsaes Tin*estment in recei*a!es ,r+m t3e incrementa
saes)(F" saes rice is areay c+ecte +n t3e eisting saes
!e,+re t3e +icy c3ange an it in*ests +ny t3e*aria!e c+sts ,+r t3e ne recei*a!es)
#cc+"nts &ecei*a!es: reit P+icy
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#cc+"nts &ecei*a!es: reit P+icy
-reit Peri+
&I O QS(1-') - !nSR(1-t) - kI
B3ere I O (#Pn. #Po) (So/760)
T '#Pn?S/7605
&I O Q(Amn5051A) -050JAmn5R0567
. 0510L(60-70)A0mn5/760 T 05JA60Amn/760
O - &s5 2A005
Since t3e engt3ening t3e creit eri+ i res"t inre"cti+n in t3e &esi"a Inc+me +, t3e ,irm it isn+t a*isa!e t+ increase t3e creit eri+5
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# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy
-as3 Disc+"nt%ame: 3e creit terms +, a ,irm are 1/10 net 705
Saes: &s5 J0 mn5E #PO 20aysE'O 05JAEk O 10NE t3e r++rti+n +, saes +n 3ic3c"st+mers c"rrenty take isc+"nt oO05A05 3e ,irmis c+nsiering reaing t3e terms t+ 2/10 net 703ic3 +" increase saes !y &s5 A mn5 re"ce t3e#P t+ 14 ays an increase t3e r++rti+n +,isc+"nt saes t+ 05J05 a rate is 40NB3at is t3ee,,ect +, reaing t3e isc+"nt +icy +n t3e gr+ssr+,it
#nser: 3e e,,ect +, c3ange in t3e isc+"nt +n t3e&esi"a Inc+me is gi*en !y t3e ,+rm"a:
&I O QS(1-') DISR(1-t) TkI
B3ere I O sa*ings in recei*a!es in*estment anDIS O increase in isc+"nt c+st5
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#cc+"nts &ecei*a!es: reit P+icy
- as3 Disc+"nt
8 #nser:O Q&s5Amn5(051A) -K60000@R(1-054) T 0510116J0AA@
O &s5 -K1K45
Since t3e &esi"a Inc+me is re"ce e*en a,ter increasesaes c3ange in terms is n+t esira!e ,+r t3e c+many5
-------------------------------------------------------------------------------
U : DIS O n(So S)n- oSoo
O(5JJA000000502) . (5AJ000000501)
OK600005
I O So/760(#Po.#Pn) . ' S/760 #Pn
O (J0000000/7606) . 05JAA000000/76014
O&s5116J0AA5
#cc+"nts &ecei*a!es: reit P+icy
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#cc+"nts &ecei*a!es: reit P+icy-
+ecti+n Pr+gramme
+ecti+n Pr+gramme: !
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#cc+"nts &ecei*a!es: reit P+icy
M+nit+ring recei*a!es: S+me +, t3e meas"res:
m+nit+ring +, #*5 c+ecti+n eri+ (#P)E #geing
Sc3e"e (#S)E +n*ersi+n matri an F+at
anaysis5
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#cc+"nts &ecei*a!es: reit P+icy-
+ecti+n Pr+gramme
8 %ame: # ,irms saes is &s5 40 mn5E #P O20aysE 'O05J0E kO12N an !a e!t rati+ O 050A5
3e ,irm r++ses t+ rea its c+ecti+n e,,+rt 3ic3
i "s3 " t3e saes !y &s5 A mn5 increase t3e
#P t+ 40 ays an raise t3e =D rati+ t+ 05065 arate is 40N5 Fin t3e e,,ect +n t3e &esi"a Inc+me5
8 #nser: 3e e,,ect +, ecreasing t3e rig+"r +,
c+ecti+n r+gramme +n r+,it may !e estimate as
,++s:&I O QS(1-') - =DR(1-t) - kI
B3ere I O increase in in*estment in recei*a!es an
=D O increase in !a e!t c+st5
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#cc+"nts &ecei*a!es: reit P+icy-
+ecti+n Pr+gramme
&I O QA0000005 20 -05064A000000 T
050A40000000R 056
- 0512L 40000000/76020
TA0000000/760405J O-1400005
Since t3e e,,ect +n t3e &esi"a Inc+me is
negati*e it is n+t +rt33ie t+ rea t3ec+ecti+n e,,+rts5
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#cc+"nts &ecei*a!es: reit P+icy-reit
%*a"ati+n
8 reit %*a"ati+n : Pr+er assessment +, creitrisks is im+rtant as it 3es in esta!is3ing creitimits5
8 Generay t+ tyes +, err+rs +cc"r 3ie
assessing t3e creit risks5 3ey are :8 (i) # g++ c"st+mer is miscassi,ie as a ++r
creit risk . 3is eas t+ +ss +, r+,it +n saest+ g++ c"st+mers 3+ are enie creit
8 (ii) # !a c"st+mer is miscassi,ie as a g++creit risk - 3is res"ts in !a e!t +sses +ncreit saes mae t+ risky c"st+mers5
# t & i ! it P i it
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#cc+"nts &ecei*a!es: reit P+icy-reit
%*a"ati+n3ree met3+s "se : raiti+na reit #naysis
"merica reit Sc+ring an Discriminant #naysis5raiti+na reit anaysis:
+ creit+rt3y is t3e c"st+mer : 3e ,i*e s are:
3aracter (iingness t+ 3+n+"r +!igati+ns)E
aacity (a!iity t+ ay +n time . ,inancia sit"ati+n .+erating cas3-,+s)E
aita (+n in*estment in !"siness . stake)
+atera (Sec"rity +,,ere) an
+niti+ns (Genera %c+n+mic c+niti+ns)
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#cc+"nts &ecei*a!es: reit P+icy-reit
%*a"ati+n
8 #naysis +, Financia$ S#a#emen#s(& #& D/%&ati+ %=I/# &% &I etc5) +!taining &an-re(erences (,r+m t3e !anker +, t3e r+secti*ecient) an #naysis +, t3e (irms pas#
eperience (i, a ne cient 3at is t3eimressi+n +, t3e saesman 3+ g+t t3e cient)i g"ie in e*a"ating a +tentia creit+r .3et3er 3e is ikey t+ ay " 3is e!ts +n time
+r n+t5
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#cc+"nts &ecei*a!es: reit P+icy-reit
%*a"ati+n
8 "merica reit Sc+ring: Stes are:(i) 3e ,act+rs ree*ant ,+r creit e*a"ati+n are
ienti,ie an eig3ts are assigne t+ t3ese ,act+rs
t3at re,ect t3eir reati*e im+rtanceE
(ii) Beig3ts are assigne t+ t3ese ,act+rs t3at re,ectt3eir reati*e im+rtanceE
(iii) 3e c"st+mers are rate +n *ari+"s ,act+rs "sing a
s"ita!e rating scaeE
(i*) 3e ,act+r eig3ts an t3e ,act+r ratings are
m"tiie t+ get t3e ,act+r sc+re an
(*) 3e c"st+mers are cassi,ie !ase +n t3e rating
ine5
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Fact+r
Fact+rBeig3t
&ating
Fact+rSc+re
A 4 7 2 1
Past Payment 0570 1520
P Margin 0520 05J0
"rrent &ati+ 0520 0560
D/% &ati+ 0510 0540
&% 0520 1500
&ating Ine 4500
Eamp$e:
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#cc+"nts &ecei*a!es: reit P+icy-reit
%*a"ati+n
Finay a &isk assi,icati+n Sc3eme 3as t+ !e,+rm"ate !y t3e ,irm5 ne s"c3 eame +,&isk casses is as ,++s:
15 "st+mers it3 n+ risk +, e,a"tE
25 "st+mers it3 negigi!e risk +, e,a"t(e,a"t risk +, say ess t3an 2 N)E
75 "st+mers it3 itte risk +, e,a"t (e,a"trate !eteen 2 N an AN)E
45 "st+mers it3 s+me risk +, e,a"t (e,a"trate !eteen AN an 10N) an
A5 "st+mers it3 signi,icant risk +, e,a"t(e,a"t rate in ecess +, 10 N)
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#cc+"nts &ecei*a!es: reit P+icy-
reit Granting Decisi+n
8 reit Granting Decisi+n: reit +rt3iness +, t3er+secti*e cient is assesse5 S3+" t3e creit !e
+,,ere Decisi+n ree anaysis it3 assigne
r+!a!iities ,+r t3e i,,erent scenari+ i 3e in
taking t3e ecisi+n5(See Prasanna 3anra Pages 0-0J)
8 I, t3ere is a reeat +rer a,ter t3e ayment ,+r t3e
,irst +rer is recei*e it may !e ass"me t3at t3e
r+!a!iity +, t3e c"st+mers e,a"t is ess t3ant3at +, t3e ,irst +rer5 #gain "sing assigne
r+!a!iities a ecisi+n tree anaysis i gi*e
r+er g"iance in taking t3e ecisi+n t+ eten
creit5
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ing recei*a!es
M+nit+ring/+ntr+ing t3e recei*a!es:
3e #P +r t3e Days Saes "tstaning
(DS) is a meas"re c+mm+ny "se t+
m+nit+r t3e ayment !e3a*i+"r +, t3ec"st+mers5 It is e,ine as : &ecei*a!es/
#*5 reit Saes er ay5
8 +nsier t3e ,++ ing e ame
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8 +nsier t3e ,++ing eame:
Saes an &ecei*a!es Data
&s5 In ak3sM+nt3 Saes &ecei*a
!esM+nt3 Saes &ecei*a
!es
Can 1A0 400 C"y 1K0 740
Fe! 1A6 760 #"g"st 200 7A0
Marc3 1AJ 720 Setem!er 210 760
#ri 1A0 710 ct+!er 220 7J0
May 10 700 +*em!er 270 400
C"ne 1J0 720 Decem!er 240 420
8 DS at t3e en +, eac3 ? arter are as ,++ s
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8 DS at t3e en +, eac3 ?"arter are as ,++s:
8 First r5: 720/(1A0T1A6T1AJ)/K0 O 62 aysE
8 Sec+n r5: 720/(1A0T10T1J0)/K1 O AJ aysE
8 3ir r5: 760/ (1K0T200T210)/K2 O AA aysE
8 F+"rt3 r5: 420/ (220T270T240)/K2 O A6 ays5
Be can +!ser*e t3at t3e +ecti+ns 3a*eimr+*e a itte5 I, t3e DS is it3in t3erescri!e n+rms t3en t3e +ecti+ns areeeme t+ !e "ner c+ntr+5
# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es
8 #geing Sc3e"e (#S):
assi,icati+n +,
+"tstaning recei*a!es
at a a gi*en +int +,time int+ i,,erent age
!rackets5
8 F+r eame:
#ge Gr+"(in ays)
Per cent&ecei*a!es
0-707A71-6040
61-K020
VK0A
# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es
#S eicts t3e age-ise istri!"ti+n +, acc+"ntsrecei*a!e at a gi*en eri+ +, timeE
- 3es ienti,y c3anges in ayment !e3a*i+"r +,c"st+mersE
- can !e c+mare t+ creit eri+ eteneE
- #S !ey+n imits inicates 3ig3er r+!a!iity +,!a e!ts an is in,"ence !y t3e saes attern5
3e act"a #S is c+mare it3 s+me stanar #St+ etermine 3et3er t3e acc+"nts recei*a!esare in c+ntr+5
# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es
8 +ecti+n Matri (+r +n*ersi+n matri): 3e DSan #S met3+s aggregate t3e saes an
recei*a!es +*er a eri+ +, time 5
8 ="t t3e ayment attern is n+t re*eae !y t3ese t+
met3+s58 3e +n*ersi+n matri met3+ (e*e+e !y
BG $eeen an & B C+3ns+n) s+*es t3is iss"e:
3e c+ecti+ns reaise in any m+nt3 + n+t ertain
3+y t+ t3at m+nt3 !"t s+me +, t3e re*i+"s m+nt3sas+5
# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es
8 S+ t3e matri in t3is met3+ anayses t3e
ayment attern5 $++king at t3e c+n*ersi+n
matri +ne can
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es-+n*ersi+n MatriM+nt3 r5 Saes M+nt3y +ecti+ns
&s5 Can Fe! Marc3 #ri May
ct 10000 1200(12N)
+* K000 200(70N)
400(4N)
Dec J000 7000
(7JN)
2K00
(76N)
K00
(11N)
Can 6000 J0
(17N)
2A00
(42N)
2000
(77N)
20
(12N)
Fe! J000 --------- 1100
(14N)
2J00
(7AN)
7200
(40N)
K00
(11N)
# t & i ! it P i
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es-+n*ersi+n Matri
8 3e c+n*ersi+n matri met3+ is n+t eenent +nsaes e*e5
8 It ,+c"ses +n t3e key iss"e t3e pamen#s
&eha.io'r+
8 It ena!es +ne t+ anayse m+nt3-!y-m+nt3 ayment
attern as against t3e c+m!ine saes an ayment
atterns5
8 # imitati+n +, t3is met3+ is t3at it cann+t !e
reare +n t3e !asis +, "!is3e ,inancia
statements a+ne5 Interna ,inancia ata are
re?"ire5 ="t sti t3is met3+ is ess emaning +n
interna ata t3an t3e #S met3+5
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Ac#i.i#ies F$oa#s
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15 Saes I5 =iing F+at
25 Sening in*+ices t+ c"st+mers II5 Maiing F+at (1)
75 &ecei*ing In*+ices !y "st+mers III5 et reit F+at
45 De!t+rs sen c3e?"es I'5 Maiing F+at (2)
A5 3e +5 recei*es t3e c3e?"e '5 3e?"e Pr+cessingF+at
65 3e?"e is e+site int+ t3e !ank 'I5 =ank F+at (1)
5 as3 is mae a*aia!e t+ t3e c+5s!ranc3
J5as3 remitte t+ +, t3e +5 'II5 &emittance F+atK5 &emittance recei*e !y +, t3ec+5 an creite t+ its !ank acc+"nt5
'III5 =ank F+at (2)
#cc+"nts &ecei*a!es: reit P+icy
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es . F+at #naysis
8 S+ e*en i, t3e c"st+mer r+mty remits t3e am+"nt
!y c3e?"e "e t+ t3e eay !"it int+ t3e system +,
t3e c3e?"e c+ecti+n r+cess !y t3e !anks Seers
are n+t a!e t+ "tiise t3e ,"ns immeiatey5
8 +e*er "e t+ t3e m+ern tec3ni?"es an
c+m"terisati+n +, !anking +erati+ns n+aays t3e
engt3 +, t3e c3e?"e c+ecti+n r+cess 3as !een
greaty re"ce5 (+re =anking S+"ti+ns .
#ny3ere !anking Direct De+sits +, 3e?"es !y
c"st+mers int+ t3e Seers =anks !ranc3es . at any
centre)
#cc+"nts &ecei*a!es: reit P+icy
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es
8 Imr+*ements re?"ire in t3e management +,
recei*a!es:
8 reit +icies nee t+ !e artic"ate in eicit
terms an re*ise eri+icay in t3e ig3t +,interna an eterna c3anges5
8 # r+er system 3as t+ !e e*e+e ,+r
c+ntin"+"s creit araisa an e*a"ati+n +,
creit+rt3iness +, c"st+mers5
#cc+"nts &ecei*a!es: reit P+icy
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#cc+"nts &ecei*a!es: reit P+icy-
+ntr+ +, &ecei*a!es
8 3ere s3+" !e r+*isi+n ,+r >eceti+nre+rting eseciay in resect +, + an+*er"e +"tstanings s+ t3at s",,icient ana*ance arning signa can !e r+*ie !e,+re
t3ese !ec+me !a e!ts +r e!ts +, +"!t,"rec+*ery5
8 3ere s3+" !e !etter c++rinati+n !eteensaes r+"cti+n an ,inance eartments5
B+rking aita
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B+rking aita
8 Im+rtance +, B management . It a,,ects t3e
&I in !+t3 ays : t3e aita em+ye as eas t3e &et"rn5 3ere,+re any imr+*ement in
t3e management +, B i a,,ect &I *ery
,a*+"ra!y . an *ice *ersa5
8 #n e,,icient manager +" try t+ ens"re t3at
t++ m"c3 +, caita is n+t circ"ating in t3e
!"siness in t3e ,+rm +, B n+r i 3e a+ t3e
B t+ ,a !e+ a artic"ar e*e . e i strikea !aance !y a care," st"y +, t3e m+*ements
+, B in s"ccessi*e eri+s5
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B+rking aita
8 In*estment in # an t3e e*e +, $ 3a*e t+ !e
geare ?"icky t+ c3anges in saes5
8 Finance Managers sen a great ea +, time in
managing # an $ . arranging s3+rt-term,inancing neg+tiating ,a*+"ra!e creit terms
c+ntr+ing t3e m+*ement +, cas3 aministering
acc+"nts recei*a!e an m+nit+ring t3e
in*estment in in*ent+ries c+ns"me a great ea+, time +, ,inance managers5
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B+rking aita
8 3ere is a c+se interacti+n am+ng B
c+m+nents5
8 # arge acc"m"ati+n +, FG may 3a*e t+
!e is+se +, t3r+"g3 i!era creit terms+r t3r+"g3 a a creit c+ecti+n r+cess5
8 # ,irms i?"iity cr"nc3 may !e s+*e
t3r+"g3 gener+"s isc+"nts +n its saes5
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B+rking aita
8 3e im+rtant ,act+rs in,"encing t3e Bnees +, a ,irm are :
at"re +, !"sinessE
Seas+naity +, +erati+nsEPr+"cti+n P+icyE
Market c+niti+ns (c+metiti+n@creit
terms55)+niti+ns +, s"y (in*ent+ry +, ra
materias sares an st+res@)
Dan%ers o( #oo $i##$e *CDan%ers o(
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Dan%ers o( #oo $i##$e *CDan%ers o(
#oo m'ch *C
+ntri!"ting ,act+r t+ !"siness ,ai"resManagement e,,iciencymay eteri+rate t3r+"g3c+macency
Fr"strates t3e enterrise +!
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B+rking aita
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B+rking aita
8 3e t3ree ,inancia rati+s 3ic3 are im+rtant in
keeing a c+nstant atc3 +n t3e Bmanagement : In.en#or T'rno.er Ra#io
Deors T'rno.er an! Cre!i#ors T'rno.er+
8 3e ,inance asect +, B management
essentiay means c+ntr+ing t3e c+st +, ,inance
in*+*e5 +st +, ,inance *aries acc+ring t+ t3e
i,,erent s+"rces +, ,inance5
8 ick t3e ic+n !e+ t+ see t3e +rking +, rati+s:
Microsoft Word
Document
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Marketing &esearc3
8 De,initi+n !y #M#: M& is t3e systematicgat3ering rec+ring an anaysing +, ata a!+"t
r+!em reating t+ marketing +, g++s an
ser*ices5
8 9+ter: Systematic r+!em anaysis m+e
!"iing an ,act ,ining ,+r t3e "r+se +,
imr+*e ecisi+n making an c+ntr+ in t3e
marketing +, g++s an ser*ices5
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Marketing &esearc3
8 &eca t3e stes in*+*e in M&:15Setting t3e "r+se +r +!
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Marketing &esearc3
8 DECIDE mo!e$:8 D- De,ine t3e marketing r+!em
8 E- %n"merate t3e c+ntr+a!e an
"nc+ntr+a!e ecisi+n ,act+rs8 C- +ect ree*ant in,+rmati+n
8 I- Ienti,y t3e !est aternati*e
8 D- De*e+ an imement a marketing an
8 E- %*a"ate t3e ecisi+n an t3e ecisi+n
r+cess
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Marketing &esearc3
8 +st-=ene,it %*a"ati+n +, M&:8 In*estment in M& s3+" r+"ce eit3er
aiti+na re*en"e +r re"ce c+sts58 +sts +, M& are #c?"isiti+n c+sts an
erating c+sts 3ereas its *a"e is t3e "tiity interms +, r+,ita!iity an market s3are etc5
8 B'!%e# (or MR: 3e siWe +, t3e !"get is"s"ay !ase +n +ne +r m+re +, t3e ,act+rs:
3e >seing a!iity +, t3e M& 3ea instea +, t3e*a"e +, t3e ser*ices renere t+ t3emanagementE
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Marketing &esearc3
#m+"nt neee t+ meet +r !eat t3e tyica e*e+, eenit"re inc"rre !y t3e c+metit+rsE
t3e am+"nt t3at t3e c+many can a,,+r t+ sen. +!*i+"sy t3e !"get gets eane in g++
times an c+ntracte 3en !"siness c+niti+nsare tig3t an
="geting !ase +n s+me ,ie ercentage +,t3e t+ta marketing c+st !"get M& !eingargey a matter +, 3a!it5
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Marketing &esearc3
8 +ne +, t3ese !ases are ae?"ate t+ meett+ays nees5
8 3e c"rrent t3inking an ie++gy is t3at M&
s3+" !e regare as an in*estment an n+t aneense5
8 F+r meas"ring t3e e,,ecti*eness +, M& et
"se t3e ,+rm"a:
8 (>B+rt3 +r 'a"e +, Fining Pr++rti+n +,
cr"cia cases)/#nn"a M& ="get O &I
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Marketing &esearc3
8 3is is a g++ ar+ac3 t+ e*a"ate eenit"re
+n M& +n a 3ist+rica !asis5
8 ="t t3e imitati+n +, t3e ,+rm"a is t3at it +es n+t
r+*ie a !asis ,+r setting a !"get ,+r a ,"t"re
eri+ in 3ic3 t3e anticiate circ"mstancesmay !e ?"ite i,,erent ,r+m t3+se +, t3e
immeiate ast eri+5
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Marketing &esearc3
8 Fr+m t3e ,inancia ange t3e m+st +!*i+"s?"esti+n t3at arises is XB3at s3+" Marketing
Panning +stY
8 B Dickers+n +g"e 3as gi*en a sime ,+rm"a3ic3 is !ase +n t3e ass"mti+n t3at any
anning e,,+rt +" re?"ire certain am+"nts
an certain tyes +, aiti+na in,+rmati+n an
c+nse?"enty t3ere s3+" !e a c+st !ene,ite?"ati+n t+ eamine t3is 5
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Marketing &esearc3
8 3e ,+rm"a is :8 Z B,- B 3ere B O P' . P,FE
8 O c+st (a,ter taes) +, +!taining
in,+rmati+n5 +st inc"es eenit"re T++rt"nity c+st +, r+,its ,+reg+ne eit3er!eca"se +, man+er +n t3is r+
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Marketing &esearc3
8 B (t3e eecte P' +, a an &e(ore a!!i#iona$in(orma#ion is co$$ec#e!>2
8 P O t3e eig3te a*erage +, a range +,s"!s"ccess +, a artic"ar an &ase! on a$$ #hein(orma#ion no/ a.ai$a&$e28 'O t3e eig3te a*erage +, a range +,
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8 P, 1 . PE
8 F O t3e eig3te a*erage +, a range +,
s"!
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Pr+"ct Panning an De*e+ment
3ater 11 +, = 9 3atter
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8 Pr+"cts m"st !e anne . n+t neesE t3ey
s3+" se >!ene,its n+t ,eat"res5
8 &eca t3e i,,erent e*es +, a r+"ct- t3e
c+ns"mer 3ierarc3y !y 9+ter: +re =asic%ecte #"gmente an P+tentia5
P t P i D t
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+ attri!"tes +, a r+"ct:8 P3ysica +r Meas"ra!e an
8 Psyc3++gica +r Percei*e5
Marketers try t+ e+it t3e ercei*eattri!"tes5
In t3e r+"ct-mi +, a marketer t3e reati*e
im+rtance +, eig3tage +, t3e i,,erentr+"cts a+ng criteria ike Saes Gr+ssMargin etc5 3a*e t+ !e ascertaine5
P t P i D t
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8 9+ters ar+ac3 t+ Pr+"ct $i,e yce animicati+ns - t3e 3"man !eing an a r+"ct:
8 3e P$ c"r*e:
3i3++ . Intr+"cti+nE #"t3++ . Gr+t3EMan3++ . Mat"rity an %tincti+n . Decine5
3e 3aracteristics
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S#a%es I II III I;
Saes $+ &ising Peak Decining+st/
"st+merig3 #*erage $+ $+
Pr+,it ega-ti*e
&ising ig3 Decining
"st+mers Inn+-*at+rs
%ary Mie .#+ters
$aggars.
Ma
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S#a%esI II III I'
reate
Pr+"ct#areness
#n tria
Maimise
Market'a"e
Maimise
Pr+,it anDe,enMarketS3are
&e"ce
%enit"re
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8 X3e engt3 +, t3e Pr+"ct cyce is g+*erne !yt3e rate +, tec3n++gica c3ange t3e rate +,
market accetance an ease +, c+metiti*e
entry5 =y an arge c+ns"mer r+"cts 3a*e
s3+rter i,e cyce 3ereas !asic in"stry +r
r+"cts g++s 3a*e +nger i,e cyce5Y .
C+e Dean5
3e >Diagn+sis an Pr+gn+sis tec3ni?"e isa+te t+ ,in t3e stage +, t3e i,e cyce 3ic3
a r+"ct is assing t3r+"g3 at a gi*en time5
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8 In t3is tec3ni?"e si i,,erent c"r*es areran in a +gica se?"ence . as ,++s:
15 Saes re*en"e +, t3e artic"ar r+"ct ,+r
t3e ast ,i*e years +, t3e ,irmE
25Saes re*en"e ,+r t3e same eri+ as in 1
a!+*e ,+r 3e same r+"ct ,+r t3e
in"stry as a 3+eE75 Direct c+st +, seing ,+r t3e r+"ct +,
t3e ,irm ,+r t3e eri+E
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45Pr+,it 3ic3 is t3e i,,erence !eteen saes
re*en"e (1 a!+*e) an c+st +, seing (7 a!+*e)5
(3is >Pr+,it is n+t t3e same as t3e c+n*enti+na
r+,it5)
A53e &I reating t3e Pr+,it (4) t+ t3e c+st +,in"ts +r in*estments as er 75
3e &I c"r*e an c+maris+n !eteen t3e t+
c"r*es as er 1 an 2 a!+*e i inicate
a"t3++ +r man3++ +r ecining state +, t3e
r+"ct an i as+ s"ggest necessary
c+rrecti*e acti+ns5
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65#cti+n c"r*e inicating acti+ns re?"ire t+s"stain a"t3++ +r man3++ an re*ent
ecine5 3is c+" !e in t3e ,+rm +, m+re
res+"rce in"ts 3ig3er re*en"e t3r+"g3 !etter
ricing +icy etc5
3is tec3ni?"e s3+" !e a+te at reg"ar
inter*as say e*ery 6 m+nt3s ,+r c+ns"mer
r+"cts an e*ery t+ +r t3ree years ,+rin"stria r+"cts5
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8 Disc+*ery +, ne "ses entry int+ t+tay ne
markets emergence +, ne c"st+mers aiti+n
+, ne ,eat"res@53ese are t3e t3ings t3at make
t3e P$ +, a r+"ct *ery "nreicta!e5
8 3e t3ree !r+a asects +, r+"ct anning:%+ring ne "ses +, eisting r+"cts .
Intr+"cti+n +, ne r+"cts - an r"ning +r
3asing +"t +, eak r+"cts5
Generay e+ring ne "ses +, eisting r+"cts
is a negecte area in marketing5
Pr+"ct Panning an De*e+ment
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Pr+"ct Panning an De*e+ment
8 =++W #en an amit+n 3a*e ienti,ie t3e,++ing tyes +, ne r+"cts :
(i) e t+ t3e +r r+"cts-an entirey ner+"ctE
(ii) e r+"ct ines . entering an esta!is3emarket ,+r t3e ,irst timeE
(iii) #iti+n t+ eisting r+"ct ines . s"ementc+manys eisting r+"ct inesE
Pr+"ct Panning an De*e+ment
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Pr+"ct Panning an De*e+ment
(i*) Imr+*ement/re*isi+n t+ eisting r+"cts .imr+*e er,+rmance an greater ercei*e
*a"eE
(*) &e-+siti+ning . eisting r+"cts targete t+ne markets ne c"st+mersE
(*i) +st re"cti+ns . nes r+"cts r+*iing
simiar er,+rmance at re"ce c+st
Pr+"ct Panning an De*e+ment
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Pr+"ct Panning an De*e+ment
8 3e r+"cts ne t+ t3e +r . as in (i) -in*+*et3e greatest risk an t3e ast +ne as in (*i)
in*+*es t3e east risk5
8 It is essentia t+ ienti,y ne ++rt"nities antake a*antage +, t3e sit"ati+n !y e*e+ing
ne r+"cts . since t3e eisting r+"ct range
i s++ner +r ater !e in a ecining stage in t3e
i,e cyce
Pr+"ct Panning an De*e+ment
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Pr+"ct Panning an De*e+ment
8 riteria in e Pr+"ct Decisi+ns:
Searc3 ,+r synergy - marketing s"iers
c"st+mers tec3n++gica e?"iment
man+er@
searc3 ,+r +rt,+i+ e,,ectEsearc3 ,+r sta!iityE searc3 ,+r sec"rityE
P$ c+nsierati+nsE *ertica seciaisati+n
an segment m+*ements5
Pr+"ct Panning an De*e+ment
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Pr+"ct Panning an De*e+ment
8 Stages in e Pr+"ct e*e+ment:,irst in,+rmati+n a!+"t ne r+"ct ieasEcrei!iity c+"ntE matc3ing +, +!
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Pr+"ct Panning an De*e+ment
8 Financia %*a"ati+n +, a =ran:
i recenty a !ran as assesse in ?"aitati*e
terms +ny . ike !ran reca aareness
+siti+ning etc53e ,inancia *ie +, a !ran in terms +, >!ran
e?"ity is a recent 3en+men+n5
%arier M[#s ere +ne ,+r t3e "r+se +,
getting 3+ +, an esta!is3e !ran5
Pr+"ct Panning an De*e+ment
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Pr+"ct Panning an De*e+ment
8 +aays it is *ery c+mm+n t+ see M[#s !eing+ne at a m"tie +, many m+re times t3e*a"e +, t3e ac?"irees assets +r a ,e times t3emarket *a"e +, its s3ares5
8 reating a !ran ,r+m scratc3 is c+sty time-c+ns"ming an risky an s+ it is easier t+ in*estin an eisting an esta!is3e !ran5
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Pr+"ct Panning an De*e+ment
8 3r+"g3 ac?"iring a !ran t3e ac?"irer a*+is,"t"re c+metiti+n5
8 3e ac?"isiti+n rice
O *a"e +, t3e tangi!e assetsT rice +, t3e !ran
Tc+st +, re*enting t3e !ran ,r+m
g+ing int+ t3e c+metit+rs 3ans5
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8 S"ggesti+ns ,+r t3e ,inancia treatment +, >!rane?"ity:
'a"e +, a !ran is an >asset an can !e
ereciate year a,ter yearE'a"e +, a !ran s3+" !e ritten +,, against t3e
a*aia!e reser*es an s"r"s5
="t 3at a!+"t t3e *a"es +, t3e !rans internay
create . B3et3er t+ s3+ t3at as an asset ani, s+ 3en an at 3at *a"e
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8 3e c+nse?"ences +, n+t *a"ing t3e internaycreate !rans are:
t3e ,irm "ner*a"es itse,E
its +n s3are3+ers are misin,+rme an s+may se t3eir s3ares +"t at ess t3an t3eir rea+rt3E
n t3e +t3er 3an e*en i, t3e ,irm *a"es itsinternay create !rans t+ re,ect t3e tr"eec+n+mic *a"e it may !e treate as>s"!
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8 3e +t3er iss"es:
+ m"c3 +, t3e a*ertisement eenses 3as
g+ne t+ars !ran !"iing
+ m"c3 3as g+ne t+ars ac3ie*ing saes in t3e
s3+rt r"nIn t3e case +, an ac?"isiti+n !ran *a"ati+n is a
,"ncti+n +, t3e "timate "r+se +, t3e ac?"isiti+n5
3ere,+re t3e *a"ati+n ,r+m t3e ac?"isiti+n +int +,
*ie is ikey t+ !e i,,erent ,r+m acc+"nting +int
+, *ie an t3e *a"e +" !e c3anging
c+nstanty5
Pr+"ct Panning an De*e+ment
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8 3"s t3ere are c+nstant c+n,icts !eteen t3e,inance an marketing r+,essi+nas in resect
+, !ran *a"ati+ns5
83ey s3+" 3a*e m"t"a resect an try t+"nerstan t3e c+mm+n +!
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8 Met3+s ,+r !ran *a"ati+n:in terms +, c+sts . ist+ric c+st i5e5 estimate
act"a c+st +, creati+n +r ac?"isiti+n +, a !ranOR &eacement c+st i5e5 estimate c+st
+, reacing an eisting !ran !y an ienticane +ne t3r+"g3 creati+n +r ac?"isiti+nE
#cc+ring t+ market rice i5e5 t3e rice t+ !i +ray ,+r ac?"iring a !ran e esta!is3e in t3e
marketE#cc+ring t+ +tentia earnings5
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8 F+rm"ae ,+r cac"ating t3e =rans *a"e:
(a) 'a"e +, t3e !ran
O \ (t O 1 t+ ) &=#/(1Tr)]#
&esi"a 'a"e/(1Tr)N 3ere &=# #nticiate re*en"e in year t
attri!"ta!e t+ t3e !ran an r O isc+"nting
rate5
&esi"a *a"e !ey+n year O &=N /(r-g)
3ere g O &ate +, re*en"e gr+t35
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8 (!) 3e M"tie met3+:
P/% O Market *a"e +, %?"ity/9n+n Pr+,its
=ran M"tie O =ran %?"ity/=ran et Pr+,its
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8 Pr+"ct %iminati+n: Sick an eak r+"ctss3+" !e eri+icay eiminate58 It is +!ser*e t3at t3e marketers + n+t ay
m"c3 attenti+n t+ t3is "e t+ t3e reas+ns:
It is easier t+ a r+"cts t3an t+ eiminateEIt is i,,ic"t t+ eete yesterays g++
r+"cts - it is a sa ecisi+n t+ art it3 +an trie ,riensE
%ectati+n t3at t3e eak r+"ct mig3t +e in ,"t"re it3 c3anges in t3e marketc+niti+nsE
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# t3+r+"g3 anaysis is re?"ire !e,+reeiminating any r+"ct5
a*ing t++ many items "ner t3e *arie tyes +,r+"cts is "nesira!e5 It in*+*es s"!stantia3ien c+sts ine,,iciencies an +sses ike:
++ many r+"cts@aste +, 3ysica an,inancia res+"rces (3ig3 "nit c+st +, r+"cti+n3ig3er c+sts +, are3+"sing an istri!"ti+n@)
SiWea!e art +, r+m+ti+n eenses g+ing
asteE Interna c+metiti+n . r+"ct canni!aisati+nBaste +, manageria time an attenti+nE
# r+"ct 3ic3 3as +"ti*e its "tiity s3+" !e
merciessy r"ne (. kie)
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8 + t+ ienti,y t3e eak r+"cts ,+reiminati+n F+r t3is e 3a*e t+ c3eck t3e
r+"cts as t+ 3+ t3ey er,+rm5
8Pr+"ct-Market %*a"ati+n:8 " r o ! ' c #
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8 Pr+"cts s3+" !e "t in t3e resecti*e?"arants: s+me ,+rm"a is: " t+ 7 years +
,+r c+ns"mer r+"cts an ,i*e years ,+r
in"stria r+"cts5
8 e "se +r aicati+n +, an + r+"ct may !e
c+nsiere as a ne r+"ct5
8 Determine t3e ercentages +, t+ta saes an
t+ta gr+ss margin earne !y eac3 gr+"58 n anaysis +, t3e ,ig"res ,+r t3e ?"arants
s+me in,erences may !e ran ike :
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8 I, t3e ?"arant 1 s3+s at east a 2AN +, t+ta
saes +r GP Margin t3en it may !e c+nsiere
t+ !e satis,act+ry5
8 I, t3e ?"arant 4 s3+s siWea!e ,ig"re +, say
AN +r m+re in terms +, saes +r GP Margint3en t3e c+many may !e 3eaing t+ars
sickness5 It s3+s ++r marketing e,,ecti*eness5
S+ t3e ,ig"res +, t3e ?"arant 4 s3+" !e
minim"m58 Pr+"cts in ?"arants 2 an 7 s3+ generay
satis,act+ry marketing e,,ecti*eness5
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Pr+"ct Panning an De*e+ment8 &et"rns-Margin Matri:
Re#'rn
i%h Lo/
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8 3e c"t-+,, rates ,+r eac3 may !e ,ie at t3e
meian +, Marketing &I an MM resecti*ey5
8 #,ter t3e r+"cts/ r+"ct gr+"s are cassi,ie int+
t3e ,+"r s?"ares s+me s"ggeste c+nc"si+ns may
!e as ,++s:
8 "arant 1: satis,act+ry-retain t3e marketing miE
8 "arant 2: "t c+sts a
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8 Ieay a marketer s3+" try t+ 3a*e as manyr+"cts as +ssi!e in t3e "arant 1 an as
,e r+"cts as +ssi!e in "arant 45
8 ++ many r+"cts in "arant 4 +int t+
insiient sickness +, t3e c+many5
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8 P$: In"stry *is-^-*is t3e ,irm:
In"stry
C
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Ma#'ri# Dec$ine
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8 P+ssi!e in,erences are as ,++s:8 In"stry an c+many a"nc3: $eaers3i
stat"sE
8 In"stry gr+t3 - +many a"nc3: G++ !"t
m+nit+ring re?"ireE8 In"stry mat"rity - +many a"nc3: + !e
etremey care," as t3e sit"ati+n is ,ra"g3t it3angerE
8 In"stry ecine . +many a"nc3: G+ sa*et3e c+many5
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8 =G M+e:
&eati*e Market S3are ig3 $+
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8 ?s: =ring #D c+ns"me m+re cas3E8 as3 +s !ring m+re cas3E
(S+ t3e +5 s3+" try t+ 3a*e m+re as3 +ss+ t3at t3e cas3 can !e "se t+ n"rse anc+n*ert t3e s 3ic3 are >Pr+!em 3iren t+?s5)
, c+"rse s+me i g+ t+ >D+gs 3ic3 take a +t+, managements time an attenti+n an as+,inancia an +t3er res+"rces +, t3e c+many53e >D+gs may 3a*e t+ !e eiminate5
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g
8 It 3as !een +!ser*e !y =G gr+" t3at t3eirect man",act"ring c+sts +, t3e s an t3eas3 +s are reati*ey +5
8 +maris+n +, a t3e ,+"r m+es: Pr+"cts in
?"arant 1.3ig3y satis,act+ryE ?"arant 4 .etremey ++rE (3ese are t3e m+st ikeycaniates ,+r r"ning)5
8 So Sic-ness as /e$$ as #he Reco.er s#ar# a#
#he Mar-e# p$ace+ Financia$ ra#ios ma (in!#he e((ec#s no# #he ca'ses+
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g
8 Pr+"ct-ise r+,ita!iity anaysis: 3is 3es in:8 ienti,ying t3e m+st r+,ita!e r+"ctsE
8 a+cating ,"ns a*aia!e ,+r ,"t"re in*estmentsE
8 maintaining c+se c+ntr+ +*er c+st5Pr+"ct-ise r+,its may !e meas"re !y
c+maring t3e saes re*en"es +, eac3 r+"ct
it3 t3e c+sts ass+ciate it3 its r+"cti+n
seing an istri!"ti+n5
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g
8 3ere are t+ ar+ac3es ,+r t3is anaysis:
+ntri!"ti+n ar+ac3 an #!s+rti+n c+stingar+ac35
8 3e +ntri!"ti+n ar+ac3 re?"ires t3e segregati+n
+, a c+sts int+ t3eir ,ie an *aria!e c+m+nents
an tracing t3e *aria!e c+m+nents t+ t3e ini*i"a
r+"cts5
8 3e #!s+rti+n +sting ar+ac3 traces a c+sts -
,ie an *aria!e . t+ t3e ini*i"a r+"cts5 S+ t3isar+ac3
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g
8 ick t3e ic+n !e+ t+ see t+ eames,+r a cear "nerstaning:
Microsoft Word
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g
8 In rea i,e sit"ati+ns ,+r arge c+manies 3a*ingi*ersi,ie r+"ct range an +erating t3r+"g3
a arge n"m!er +, saes an istri!"ti+n +"tets
t3e i*isi+n/r+"ct gr+"/r+"ct-ise anaysis
is m+re c+micate5
8 +m"terisati+n 3es . !"t t3e ar+riate
r+grammes 3a*e t+ !e in ace5 ( an "
s"ggest t3e ata t3at 3as t+ !e c+ecte ,+r t3ein"ts)
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8 3e r+s an c+ns +, t3e Pr+,ita!iity anaysis:
"ros Cons
es t3e mgt5 t+ ienti,y t3e gr+t3sect+rs an t3e eak areas in t3e mktg5
+erati+ns- e+y its res+"rces ,+r
+tim"m res"ts an imr+*e t3eer,+rmances +, t3e eak +nes
+ anaysis can reace
-
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g
8 S+ e can c+nc"e t3at r+,ita!iity statementsanaysis s3+" !e "se +ny as a g"ie ,+r
+!taining "se," in,+rmati+n in anning
ar+riate meas"res ,+r imr+*ing t3e
er,+rmance +, r+"cts5
+st anaysis in Marketing Decisi+ns
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8 Managements at i,,erent e*es 3a*e t+ take aie *ariety +, ecisi+ns . s+me +, t3em"nr+gramme an +t3ers r+gramme +rreetiti*e5
8 3e >"nr+gramme are "ni?"e . eames: at3e caita eenit"re ecisi+ns5
8 &eetiti*e ecisi+ns 3a*e t+ !e taken ateri+ic inter*as in resect +, reetiti*e asects+, !"siness . eames: a*ertisement meia
seecti+n eense anning in*ent+ry n+rmsricing ecisi+ns +tim"m r+"ct +r saes mietc5
06/04/12 177
+st anaysis in Marketing Decisi+ns
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8 XM+ern Management s3+" !e intereste n+ts+ m"c3 in recent ecisi+ns as in t3e ,"t"rity +,
t3e resent ecisi+ns 5Y . Peter Dr"cker5
8 # systematic anaysis +, ast ata +"
e,initey +,,er a g++ g"ie t+ t3e ecisi+n
maker5
8 B3ie making ecisi+ns t3ere are n+n-,inancia
+r ?"aitati*e ,act+rs as+ 3ic3 eig3 3ea*iyt3an t3e ,inancia ,act+rs5
06/04/12 174
+st anaysis in Marketing Decisi+ns
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8 3e "r+se +, c+st anaysis in marketing isessentiay t+ generate an r+*ie ,inancia an?"antitati*e ata t+ ecisi+n makers t+ ai animr+*e t3e ecisi+n making r+cess5
8 # r+er anaysis +, marketing c+sts ais in t3e,++ing:
Determinati+n +, t3e marketing c+sts +, eac3r+"ct s+ t3at 3en t3ey are c+m!ine it3r+"cti+n c+st ata r+"ct-ise r+,ita!iity
can !e +rke +"tE+ntr+ +, marketing c+sts t3r+"g3
esta!is3ment +, !"gets an e*a"ati+n +,managers acc+ring t+ t3eir c+st res+nsi!iitiesE
06/04/12 17A
+st anaysis in Marketing Decisi+ns
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#naysis +, c+sts in*+*e in ser*ing i,,erentcasses +, c"st+mers an i,,erent areas t+etermine t3eir reati*e r+,ita!iity
+m"tati+n +, s"c3 ,ig"res as c+st er saesca c+st er +rer c+st t+ inc"e a nec"st+mer +n t3e !++ks etc5
Decisi+n making in regar t+ saes s"c3 asseing t3r+"g3 i,,erent c3annes +, istri!"ti+nseing in i,,erent markets an regi+ns
etermining r+"ct r+,ita!iity ,+r i,,eringe*es +, r+m+ti+na eenses t+ c3++se t3e!est +ssi!e met3+ +, saes r+m+ti+n an s++n5
+st anaysis in Marketing Decisi+ns
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8 Marketing +st #naysis is +ne in t+ stages:8 (i) +sts are initiay recassi,ie ,r+m t3eir
acc+"nting 3eaings int+ ,"ncti+na c+st gr+"s
in s"c3 a ay t3at eac3 c+st gr+" !rings
t+get3er a t3e c+sts ass+ciate it3 a artic"ar
acti*ity in marketing t3e r+"ct5
8 (ii) 3ese ,"ncti+na gr+"s are t3en a+cate t+
c+ntr+ "nits (i5e5 r+"cts c+ns"mer gr+"sc3annes +, istri!"ti+n) "sing reas+na!e
!ases5
+st anaysis in Marketing Decisi+ns
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8 3e ,"ncti+na anaysis +, marketing c+sts may
!e as ,++:Direct seing c+st . Saesmens saary
c+mmissi+n tra*eing entertainment etc5
#*ertisement an saes r+m+ti+n c+st . meiaa*ertisement cata+g"es an !r+c3"res
Market researc3 . c+st +, in-3+"se researc3
c+st +, researc3es carrie t3r+"g3 +"tsie
agencies etc5Distri!"ti+n c+st . trans+rtati+n are3+"sing
an st+rage ins"rance etc5
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+st anaysis in Marketing Decisi+ns
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F+r eame:
Saesmens Saaries : Direct c3arge
Saesmens c+mmissi+n: Saes "rn+*er
Saes ,,ice %enses: "m!er +, rers
#*ertising: Genera: Saes "rn+*er
#*ertising Seci,ic: Direct c3arge
Packing/Dei*ery %enses/Bare3+"se %enses
: +ta *+"me +, r+"cts s+
reit c+ecti+n eenses: +5 +, +rers06/04/12 140
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+st anaysis in Marketing Decisi+ns
( ,ii t i t
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(rer ,iing c+sts: rer r+cessing c+st
are3+"se eenses FG in*ent+rycarrying c+sts trans+rt c+sts acking
eenses c"st+mer ser*ices eenses
reairs "ring arranty etc5 rer ,iing
c+sts er "nit +, +"t"t i increase it3
t3e increase in *+"me +, saes )
06/04/12 142
+st anaysis in Marketing Decisi+ns
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Fie an *aria!e c+sts:
Marketing Fie +sts: Saes Managers/
Saesmens saaries saes +,,ice eenses
are3+"se rent5Marketing 'aria!e +sts: Saesmens
c+mmissi+n acking an trans+rtati+n
eenses
Marketing Semi *aria!e c+sts: 3e generaaministrati+n eenses5
06/04/12 147
+st anaysis in Marketing Decisi+ns
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+st e,,ecti*eness anaysis: + im+rtantaicati+ns:
ne is t3at y+" can ,in t3e c3eaest means +,
acc+mis3ing a e,ine +!
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&ee*ant c+st anaysis: as ie aicati+ns in
t3e areas +, intr+"cti+n +, ne r+"ctsr+ing r+"cts c3anging t3e r+"cti+n
r+cess intr+"cing mec3anisati+n t+ reace
man"a +rk5 B3ie r+ing a r+"ct +r
r+"ct ine a art +, t3e ,ie c+st mig3t cease
t+ eist a,ter t3e ine is r+e 3ie a art +, it
may !e inc"rre an s3are !y +t3er r+"ct
ines5
06/04/12 14A
+st anaysis in Marketing Decisi+ns
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06/04/12 146
"erio! "ro!'c#ion
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8 3e t+ta estimate c+st ,+r t3e entire i,e +, t3e
r+"ct O &s5 AJ00005 S+ t3e a*erage c+ster "nit O &s575A25 S+ taking int+ c+nsierati+n
t3e r+"cts t+ta i,e san +, A years ricing at
a!+"t &s5 4 i 3e t3e c+many t+ enter t3e
market an make m+ney t++5
8 Intr+"cti+n +, a ne r+"ct: in t+ ,+rms: (i)
ine etensi+n r+"cts an (ii) ne r+"cts +r
r+"ct ines8 In t3e case +, ine etensi+n r+,ita!iity +"
!e t3e incrementa c+ntri!"ti+n as t3ere is n+
ikei3++ +, aiti+n t+ ,ie +*er3eas506/04/12 14
+st anaysis in Marketing Decisi+ns
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8 (ii) In t3e case +, ne r+"ct ine t3e reata!e
,ie c+st 3ic3 arises irecty +"t +, t3eintr+"cti+n +, t3e ne r+"ct ine +" 3a*e
t+ !e e"cte ,r+m t3e initia c+ntri!"ti+n t+
arri*e at t3e net incrementa c+ntri!"ti+n ,r+m
t3e ne r+"ct ine5 3is incrementac+ntri!"ti+n can !e taken as t3e r+,it since t3e
+t3er genera ,ie c+sts +" 3a*e !een
rec+*ere t3r+"g3 t3e sae +, +t3er eisting
r+"cts5
06/04/12 14J
+st anaysis in Marketing Decisi+ns
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8 =asis ,+r t3e ,+recasts:Saes: Market s"r*ey/Market researc3E
'aria!e c+sts: eisting c+st str"ct"re an c+st
!e3a*i+"r in resect +, simiar r+"cts in t3ec+many/+t3er c+maniesE
Fie +sts: aacity r++se ,+r
r+"cti+n/marketing (ereciati+n +n t3e
aiti+na ,ie assets interest +n aiti+na+rking caita@)
06/04/12 14K
+st anaysis in Marketing Decisi+ns
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8 Dr+ing a r+"ct +r r+"ct ine: ere t3e+!
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06/04/12 1A1
Sa$es 79 69 39 ,79 79 69 ,,9
Con#ri&'#ion 17 13 4 78 17 13 35
Direc# Re$a#a&$e Fie! Cos# 3 7 0 ,1 3 7 5
Genera$ Fie! Cos#,9 ,1 4 09 ,3 ,6 09
"ro(i# ,, ,5 ,7 8 0 ,9
In t3is case t3e r+ing +, +es n+t imr+*e t3e +*era
r+,ita!iity t3+"g3 as a +ss making r+"ct5 3et+ta r+,it c+mes +n !y A 3ic3 as t3e net c+ntri!"ti+n
+, 5
+st anaysis in Marketing Decisi+ns
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8 S+ t3e ecisi+n r"e may !e:
(i) # r+"ct s3+" n+t !e r+e as +ng as t3e
c+ntri!"ti+n earne !y it is ae?"ate t+ c+*er t3e
irect c+sts reata!e t+ t3e it 5
(ii) Genera ,ie c+sts an c+mm+n eenses3ic3 cann+t !e sa*e e*en a,ter a artic"ar
r+"ct is r+e 3a*e n+ r+e t+ ay in t3e
ecisi+n . t3e t+ta am+"nt in*+*e s3+" !e
segregate an c+nsiere t+ !e t3e eenses+, t3e c+many as a 3+e 3et3er t3e r+"ct
is r+e +r c+ntin"e506/04/12 1A2
Margina +sting an =reak-e*en #naysis
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8 Margina +sting: is t3e tec3ni?"e +,
segregating ,ie an *aria!e c+sts an arri*ingat t3e c+st 3ic3 +" *ary in r++rti+n t+ t3e
*+"me +, r+"cti+n +r saes5 (Margina c+sting
an margina c+st are as+ kn+n as irect
c+sting an irect c+st)
8 Fie c+sts are "na,,ecte !y *ariati+ns in t3e
*+"me +, +"t"t (,+r a artic"ar range +,
acti*ities5)8 'aria!e c+sts are t3+se t3at ten t+ *ary irecty
in reati+n t+ t3e *+"me +, +"t"t506/04/12 1A7
Margina +sting an =reak-e*en #naysis
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8 s"ay irect materias irecty c3argea!eeenses an a art +, t3e +*er3eas c+nstit"te
t3e t+ta *aria!e c+st er "nit5
8 Margina c+st +, r+"cti+n i c+nsier +ny t3e
*aria!e c+sts reate t+ man",act"ring
+erati+nsE
8 B3ereas Margina c+st +, saes i as+ inc"e
t3e +st-man",act"ring *aria!e c+sts ,+r seingan istri!"ti+n acti*ities5
06/04/12 1A4
Margina +sting an =reak-e*en #naysis
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8 3ere are as+ +t3er tyes +, c+sts . 3ic3 aresemi-,ie an semi-*aria!e c+sts5
8 Semi ,ie c+sts: %ames are s"er*isi+n
ereciati+n +n s3i,t +erati+ns etc 3ic3
increase in stes "t+ a certain etent t3erea,ter
5
8 Semi *aria!e c+sts: 3ese *ary !"t n+t in
r++rti+n t+ r+"cti+n +r saes . may !e at a+er rate +r at a 3ig3er rate5 %ames: +er
tee3+ne c3arges etc5
06/04/12 1AA
Margina +sting an =reak-e*en #naysis
M i ti t 3 i
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8 Margina +sting tec3ni?"e rec"es any
a+rti+nment +, ,ie c+sts am+ngr+"cts5 Fie c+sts are treate as
eri+ c+sts +, t3e !"siness an are
c+nsiere searatey in arri*ing at t3er+,its +, t3e !"siness5
8 3e t+ta r+,it +, a !"siness may c3ange
merey !eca"se +, a c3ange in t3e saes-mi 3ie a +t3er ,act+rs remain
c3ange506/04/12 1A6
3ree Scenari+s . c3anges in t3e saes mi5Scenario , Scenario 1 Scenario 0
A B C A B C A B
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06/04/12 1A
A B C A B C A B
ni#s So$!)$a-hs, 1 0 0 , 1 , 3
1Con#ri&'#ion per 'ni# Rs+37 19 09 37 19 09 37 19 70
To#a$ con#ri&'#ion Rs+$a-hs37 39 59 ,07 19 69 37 49 70
Con#ri&'#ion ('n! o( #he&'siness
,87 1,7 ,77
To#a$ (ie! cos# o( #heB'siness Rs+ $a-hs
87 87 87
To#a$ "ro(i# o( #he B'siness
Rs+ $a-hs
,99 ,39 49
This eamp$e sho/s #ha# #here is no necessi# #o appor#ion #he (ie!
cos#s amon% #he pro!'c#s as $on% as o.era$$ pro(i# is main#aine! or
impro.e! as in Scenario 1+
Margina +sting an =reak-e*en #naysis
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8 /S &ati+: +ntri!"ti+n t+ Saes rati+ (as+
kn+n as P/' rati+- Pr+,it '+"me rati+-
e*en t3+"g3 it is n+t t3e rati+ +, r+,it t+
t3e *+"me)
8 I, t3e saes rice is &s5 100 an t3ec+ntri!"ti+n is &s5 40 t3en t3e /S rati+n
O 054 +r 40N
8 &eca t3at in a re*i+"s eame e3a*e +rke +"t t3is rati+5
06/04/12 1AJ
Margina +sting an =reak-e*en #naysis
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8 +ntin"ing t3e re*i+"s eame i, t3e
saes rices +, t3e t3ree r+"cts are &s5100 40 an K0 an t3e margina c+sts are
&s5 AA20 an 60 resecti*ey t3en t3e
/S rati+s are 4ANA0N an 77577N58 In t3is case ,r+m t3e saes rice +int +,
*ie t3e +rer +, re,erence +, t3e
r+"cts +" !e # an =5 B3ereas,r+m t3e /S +int +, *ie it s3+" !e
=# an 506/04/12 1AK
Margina +sting an =reak-e*en #naysis
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8 =reak-e*en +int is t3e +ne at 3ic3 t3e t+ta
c+ntri!"ti+n e?"as t3e t+ta ,ie eenses s+t3at t3ere is neit3er r+,it n+r +ss5
8 3e i,,erence !eteen t3e act"a +r r+
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8 3e =reak-e*en (=/%) +int in "nits : O +ta ,ie c+st/ nit c+ntri!"ti+n5
I, t3e ,ie c+st is &s5 20 ak3s an t3e "nit
c+ntri!"ti+n is &s5 40 t3en t3e =/% +int+, saes in "nits O A00005
3e =/% in saes *a"e
O Fie c+st/(/S rati+)
O &s520ak3s/40N O &s5 A0 ak3s in t3eeame5
Margina +sting an =reak-e*en #naysis
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8 St"y t3is eame ,+r "nerstaning +, t3ec+ncets:
8 Saes an et Pr+,it: 1st ?r: &s570ak3s an 2
ak3sE 2n?"arter: &s5 40 ak3s an 6 ak3s5
Fin: S rati+E Fie c+st er ?"arterE =% saes
*a"e ,+r t3e ?"artersE Margin +, sa,ety ,+r t3e
?rs5E saes re?"ire in ?r57 t+ earn a r+,it +, &s5
10 ak3s an Pr+,it eecte "ring ?r54 gi*ent3e saes ,+recast ,+r t3e eri+ O &s5 4A ak3s
Margina +sting an =reak-e*en #naysis
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8 #nser: Since t3ere !een net r+,it in !+t3t3e ?"arters t3e saes e*e 3as areaycr+sse t3e =% e*e an t3e r+,itaiti+n is +ny "e t+ t3e c+ntri!"ti+n
8 +maring t3e t+ ,ig"res +, t3e ?rs5 It iscear t3at t3e r+,it +, aiti+na r+,it +,&s5 4 ak3s is t3e c+ntri!"ti+n ,r+m t3e
aiti+na saes +, &s5 10 ak3s53ere,+re t3e S rati+ O 054 +r 40N5
Margina +sting an =reak-e*en #naysis
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Since S rati+ is 40N ,r+m t3e ,irst ?r5Fig"re e can eri*e t3e ,ie c+st as :
c+ntri!"ti+n(7054)-r+,it 2 O &s5 10 ak3s
=% saes Fie c+st/+ntri!"ti+n rati+ O &s510ak3s/054 O &s5 2A ak3s
Margin +, sa,ety in ?r5 2 O &s5 40-2A ak3s
O &s5 1A ak3s
Margina +sting an =reak-e*en #naysis
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8 Saes re?"ire in ?r iii t+ earn a r+,it +,&s5 10 ak3s :
+ntri!"ti+n re?"ire O ,ie c+st &s5 10
ak3s T Pr+,it &s5 10 ak3s i5e5 20 ak3s53ere,+re t3e re?"ire saes
O &s5 20 ak3s/c+ntri!"ti+n rati+ 054
O &s5 A0 ak3s5
Margina +sting an =reak-e*en #naysis
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8 Pr+,it eecte "ring t3e ?r5 I* i, t3esaes ,+recast is &s5 4A ak3s:
3e c+ntri!"ti+n +" !e &s5 4A ak3s054
O &s5 1J ak3s5 3ere,+re t3e r+,it +"!e &s5 1J ak3s-,ie c+st &s5 10 ak3s
O &s5 J ak3s5
Margina +sting an =reak-e*en #naysis
=% i ti t it ti
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8 =% in a m"ti r+"ct sit"ati+n:
Saes(&s5ak3s)
+ntri!"ti+n (&s5ak3s)
Pr+"ct /S
rati+
Pr+"
ctise
C'm'$
a#i.e
"ro!'c#
/ise
C'm'$a#i.
e
# A0N 10 ,9 7 7
= 40N 20 09 4 ,0
20N 20 79 3 ,8
Margina +sting an =reak-e*en #naysis
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8 +m+site /S rati+ O1/A0O74N8 +ta ,ie c+st is gi*en as &s5 J5A ak3s
8 3ere,+re t3e c+m+site +r c+m!ine =%
saes *a"e O &s5J5A ak3s/0574O &s5 2A ak3s
Simiary =% "nits as+ can !e +rke +"t
as ,++s: Fie +st/Beig3te a*eragec+ntri!"ti+n er "nit
Margina +sting an =reak-e*en #naysis
I 3 ! i i
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8 In t3e a!+*e eame aiti+na ata are as
,++s: nit saes ,+r t3e r+"cts #= an are2 ak3s 4 ak3s an 4 ak3s
nit Saes .&s5ak3s
+a Saes&s5ak3s
ni#"rice
ni#Con#ri&'#ion)Rs+
*ei%h#e!Con#ri&'#ion)Rs+
# 2 10 7 1+7 7
= 4 20 7 1 4 4 20 7 , 3
+ta 10 A0 ,8
Margina +sting an =reak-e*en #naysis
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8 Beig3te a*erage c+ntri!"ti+n er "nitO +ta c+ntri!"ti+n/t+ta "nits
O 1/10 &s51505
3ere,+re t3e =% "nits i !eOFie c+st/Beig3te c+ntri!"ti+n er "nit
O&s5J5A ak3s/&s5150 O A ak3s5
(r+ss c3eck n+: =% "nits"nit rice O =% saes O&s5AAak3s O &s5 2A ak3s 3ic3 is areay
arri*e at)
Margina +sting an =reak-e*en #naysis
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8 3e c+m+site /S rati+n i c3ange3en t3e saes-mi c3anges an s+ t3e
c+m+site =% saes t++5
8 3is ar+ac3 is +ny ar+imate !"t stigi*es a g++ iea a!+"t t3e
c+nse?"ences +, c3anges in t3e saes
mi5
Be 3a*e "se t3e ,++ing ,+rm"ae:
15 /S rati+ O (S- ')/S O /S100 in ercentageE
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25 =% "nitsO Fie +st/+ntri!"ti+n er "nitE75=% Saes O Fie +st/(/S rati+E /S rati+
O Fie +st/=% SaesE
45Fie +st O/S rati+=% saesE
A5+ntri!"ti+n O Saes-'aria!e c+stE
OFie +st T Pr+,it +r /S rati+SaesE
65Margin +, Sa,ety O Saes- =% saes
O(+ntri!"ti+n-Fie +st) (i5e5 r+,it)/(/S) rati+
Pricing
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8 Pricing is a cr"cia ecisi+n . an integraart +, t3e marketing mi managementE
8 Price '+"me an Pr+,it are interreate
an a,,ect r+,itE8 ig3 rice +r 3ig3 "nit r+,it eas t+ +
*+"me +, saes an + a!s+"te r+,itE
8 $+ rice +r + "nit rice eas t+ 3ig3*+"me +, saes an $o/a!s+"te r+,itE
Pricing
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8 Pricing s3+" strike a 3eat3y !aance!eteen marketing an c+st
c+nsierati+ns5
8 ="t t3e reati*e im+rtance +, t3e t+ iargey een "+n: time ,rame market
c+niti+ns rimary marketing +!
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8 #s y+" are aare t3ere are i,,erentar+ac3es t+ ricing:8 ig3 rice an + *+"me *s5 $+ rice an
3ig3 *+"meE8 G+ing rate ricingE8 Seae !i ricingE8 Ge+gra3ica ricingE8 Disc+"nt ricingE
8 Discriminat+ry ricingE8 Penetrati+n ricingE8 Skimming t3e creamE
Pricing
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8 Sn+! *a"e ricingE8 Pre-emti*e ricing E
8 Pr+"ct $i,e yce PricingE
8 Price re"cti+ns ( Price c"tting-Price ar,are-F+rmati+n +, rice carte)
Pricing
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8 +st !ase ar+ac3es:
8 F" c+st ricing . ign+res easticity +, eman
ign+res c+metiti+n n+ istincti+n !eteen ,ie
an *aria!e c+stsE
8 +n*ersi+n c+st met3+: !ase +n t3e *a"eae (.eg5 Printing in"stry)E
8 Margina +st PricingE
8&et"rn +n In*estment Pricing . "se," in a m"tir+"ct c+many +r 3ie intr+"cing ne
r+"cts 3ere n+ market rice eistsE
Pricing
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8 De*e+ing ricing strategies:8 Price !"yer is iing t+ ayE
8 Marketing +!
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8 +n Financia ,act+rs in,"encing Pricing:8 Gr+t3 asirati+nsE
8 +r+rate eansi+nE
8 +r+rate imageE8 & an DE
8 +st an e,,iciencyE
8 "st+mer +ini+nE8 +metiti+n5
Pricing
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8 In e+rt ricing t3e ,++ing c+sts 3a*e t+ !e!+rne in min:8 %-,act+ry rice +, r+"ctE8 +st +, Secia acking i, anyE
8 Insecti+n c3arges t+ %+rt Insecti+n#genciesE8 rans+rtati+n ,r+m ,act+ry t+ are3+"se/+rts
are3+"se rentasE8 earing an F+raring #gents c3arges i, anyE8 P+rt c3arges inc"ing 3aning insie t3e +rtsE
Pricing
8 D+c"mentati+n c3arges !e,+re e+rtsE
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D+c"mentati+n c3arges !e,+re e+rtsE
8 Freig3tE8 Ins"rance Premi"mE8 %+rt D"ties (i, any)E8 Im+rting c+"ntry c3arges in t3eir +rts im+rt
"ties (i, any)E8 earing c3arges at estinati+n an
trans+rtati+n c3arges t+ t3e !"yers,act+ry/are3+"seE
8 #gents c+mmissi+nE