Basic Functions of Marketing

Basic Functions of Marketing

The marketing process performs certain activities as the goods or services move from producer to consumer. Every firm does not perform all these activities or jobs. However, any company that wants to operate its marketing system successfully must carry them out. The following marketing tasks have been recognized for a long time.

1. Selling
It is core of marketing. It is concerned with the persuasion of prospective buyers to actually complete the purchase of an article. Setting pays an important part in realizing the ultimate aim of earning profit. Selling is enhanced by means of personal selling, advertising, publicity and sales promotion.

2. Buying
It involves what to buy, what quality, how much, from whom, when and at, what price. People in business buy to increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price. The products that the retailers buy for resale are determined by the need and preferences of their customers.

3. Transportation
Transport is the physical means whereby goods are moved from the places where they are produced to those they are needed for consumption. Transportation is essential from the procurement of raw materials to the delivery of finished products to the customers places. Marketing relies mainly on railroads, tracks, waterways, pipelines and air transport. The type of transportation is chosen on several consideration such as suitability, speed and cost.

4. Storage
It involves the holding of goods in proper condition from the time they are produced until they are needed by consumers (in case of finished products) or by the production department (in case of raw materials and stores). Storing protects the goods from deterioration and helps in carrying over surplus for feature consumption or use in production. Goods may be stored in various warehouses situated at different places. Storing assumes greater importance when production is seasonal or consumption may be seasonal. Retail firms are called “stores”.

5. Standardization and Grading
The other activities that facilitate marketing are standardization and grading. Standardization means establishment of certain standards or specifications for products based on intrinsic physical qualities of any commodity. This may involved quantity (weight or size) or it may involve quality (colour, shape, appearance, material, taste, sweetness etc). Government may also set some standards e.g., in case of agricultural products. A standard conveys a uniformity of the products.

“Grading means classification of standardized products into certain well-defined classes or groups.” It involves the division of products into clauses made up of unit processing similar characteristics of size and quality. Grading is very important for “raw material” (such as fruits and cerials), mining products” (such as coal, iron-ore and mangenese) and “forest products” (such as timber). Branded consumer products may bear grade levels, – A B C.

6. Financing
It involves the use of capital to meet financial requirements of the agencies dealing with various activities of marketing. The services of providing the credit and money needed to meet the cost of getting merchandise into the hands of the final user is commonly referred to as finance, function in marketing. In marketing, finances are needed for working capital and fixed capital, which may be secured from three sources – onward capital, bank loans and advances, and trade credit (provided by the manufactures to wholesaler and by the wholesaler to the retailers).

7. Risk Taking
Risk means lose due to some unforeseen circumstances in future. Risk-bearing in marketing refers to the financial risk inherent in the ownership of goods held for an anticipated demand, including the possible losses due to a fall in price and the losses from spoilage, depreciation, obsolescence, fire and floods or any other loss that may occur with the passage of time. From production of goods to its selling stage, many risks are involved due to changes in marker conditions, natural causes and human factors. Changes in fashions or interventions also cause risks. Legislative measures of the government may also cause risks.

8. Market Information
The only sound foundation, on which marketing decisions may be based, is correct and timely market information. Right facts and information reduce the aforesaid risks and thereby result in cost reduction. Business firms collect, analyze and interpret facts and information from internal sources, such as records, sales people and findings of the market research department. They also seek facts and information from external sources, such as business publications, government reports and commercial research firms. Retailers need to know about sources of supply and also about customers buying motives and buying habits. Manufacturers need to know about retailers and about advertising media. Firms in both these groups need information about competitors activities and about their markets. Even ultimate consumers need market information about availability of products, their quality standards, their prices, and also about the after-sale service facility Common sources for consumers are sales people, media advertisements, colleagues etc.

It may be noted that in addition to the mentioned jobs, the marketing manager is also involved in product planning, pricing of products, selection of distribution channels, framing of marketing objectives, environmental scanning, target market selection, market programming and developing marketing strategy.

Advantages of Production Planning & Control

Advantages of Production Planning and Control

Production planning and control yields the following main advantages,

1. Avoidance of Rush Orders
Production is well planned and its time aspects are well controlled. Therefore, production control reduces the number of risk-orders and overtime work on plant.

2. Avoidance of Bottlenecks
The incomplete work does not get accumulated because production control maintains an even flow of work.

3. Cost Reduction
Production control programmes minimizes the idleness of men and machines, keeps in process inventories at a satisfactory level, leads to a better control of raw materials inventory, reduces costs of storage and materials handling, helps in maintaining quality and containing rejection and thus reduces unit cost of production.

4. Effective Utilization of Resources
It reduces the loss of time by the workers waiting for materials and makes most effective use of equipments.

5. Co-Ordination
It serves to co-ordinate the activities of plant and results in a concerted effort by workmen.

6. Benefits to Workers
Adequate wages, stable employment, job Security, improved working conditions, increased personal satisfaction, high morale.

7. Efficient Service to Customers
It ensures better service to the customers by enabling production to be conducted in accordance with the time schedules and therefore deliveries are made on promised dates.

Nature & Importance of Production Management

Nature and Importance of Production Management

Production management has become an important now a day that it is treated to be a separate, independent functional area of management.

Production management has assumed its importance because of the following reason:

1. It is the foundation for earning profits – by producing goods or services and selling them into the market.

2. It ensures that produced goods or services are of desired quality, in required quantity and according to time-schedules.

3. It facilitates optimum inventory level.

4. It ensures proper co-ordination and necessary control, which are required for adequate, time and cost-conscious production.

5. It ensures coping with the changes in demands in the market and maintains stability in the production department.

Production Planning and Control

Production Planning, Planning is deciding in advance what to do, how to do it, when to do it, who is to do it. Then, production planning involves decision making in various production aspects, such as designing of production plans, programmes and goals, selection of production process, plant layout, provision of physical facilities (like material, tools, machines, equipments etc.) and preparation of time-schedules.

“Lawrence Bethel Observes” Production planning takes a given product or line of products and organizes in advance the manpower materials, machines and money required for a predetermined output in a given period of time. It starts with a product concept capable of being manufactured, a general idea of the process by which it can be made and a sales forecast for the descernible future.

Production Control
Control means ensuring that actual performance meets the predetermined standards. Then, “production control” refers to a set of steps for verifying whether production operations occur in conformity with the production plan adopted. It guides and directs the flow of production so that the goods of desired quality are manufactured at the right time and it maximum possible economic manner. It may be noted that “production control” is frequently used synonymously with “production planning and control” with planning being implied.

Spriegel and Lansburgh define production control as
the process of planning production in advance of operations, establishing the exact route of each individual item, part or assembly, setting, starting and finishing dates for each important item, assembly, and the finished products and releasing the necessary orders as well as initiating the required follow-up to effective the smooth functioning of the enterprise.

James Lundy says
Basically, the production control function involves the co-ordination and integration of the factors of production for optimum efficiency. The principal objective of production control is to facilitate the task of manufacturing and see that everything is being done strictly in accordance with the plan. It co-ordinates and integrates the factors of production for optimism and directs and checks the course and progress of work.

Production Management

Definition of Production Management

In modern competitive world, if an enterprise and master its production and marketing, it will be able to acquire and maintain a considerable market share.

Production may be define as the conversation of the raw material into finished goods are services through transforming process for purposes of supplying them into the market. Thus, it is process of creation of goods and services. The terms “production and manufacturing” are generally used as synonyms. Production activities are vital for the survival, growth and development of every enterprise.

Production to be successful has to be managed. Hence production management assumed great importance in every organisation.

Some important definition of production management may be given as follows:

Elwood Buffa
Production management deals with decision-making related to production process so that the resulting goods and services are produced according to the specifications in the amounts and by the schedule demanded and at minimum cost.

A.W.Field
Production management is the process of planning and regulating the operations of that part of enterprise which is responsible for actual transformation of materials into finished products.

Major Activities of Production Management

Production management deals with manpower and physical resources and facilities for transforming inputs into outputs. Production Management involves three major activities or fucntions:

1. Planning of Production Inputs
It includes determining of necessary inputs including raw materials, labour, electrical power, machines and equipments, facilities etc., required for production work.

2. Installation of the Necessary Inputs
It includes taking decisions with regard to designing of the plant, choice of the best machines and arrangement of other necessary facilities so that the production work can be started.

3. Co-Ordination and Control of the Production Process
An effective production system involves co-ordination among the various activities and affairs within the production department itself and also integration of its activities and decisions with other departments of the enterprise, such as finance, marketing, purchases, personnel, according and research and development. It also includes determining the necessary sequence of operations, preparing work schedules and assigning work to specific employees, so as to ensure smooth production operations. Control includes ensuring that the actual production performance meets the predetermined production plans and goals and also providing for proper feedback for taking corrective action.

Management science approache to Management

Management Science Or Operations Research Or Approach

Quantitative Approach
A quantitative approach to management thought is known as management science or operations approach.

“C.West Churchman. Russell Adoff and E.Leonard Arnoff” define the management science or operations research OR approach as an application of the scientific method to problems arising in the operation of a system and a solving of these problems by the solving of mathematical equations representing the system. (Introduction to Operations Research. New York Willey. 1957).

The management science approach suggests that managers can best improve their organisation by using the scientific method and mathematical techniques to solve operational problems.

The Beginning of the Management Science Approach

During the World War II, in Great Britain and in America, some mathematicians, physicists and other scientists were called to help solve complex, operational problems that existing in the military. They were able to achieve significant technological and tactical breakthroughs. The scientists were organized into teams that eventually became known as operations research or groups. When the war was over the applicability of or to problems industry gradually became apparent, particularly in the wake of new industrial technologies being put into use or specialists were called to help managers come up with answers to the new problems. With the invention of electronic computer system or procedures were formalized into what is now called “management science school” or “quantitative school”.

The early or groups typically included physicists and other “hard” scientists, who used the problem solving method known as scientific method which involves.

(i) Observing the problem system.
(ii) Constructing a model, i.e. a generalized framework from which consequences of changing the system can be predicted.
(iii) Deducting (inferring) from the model how the system will behave it changes were made in existing conditions.
(iv) Testing the model by performing an experiment on the actual system to see whether the effects of changes predicted using the model, actually occur when the changes are made.

The Operations Research groups were very successful in using the scientific method to solve their operational problems.

Now, the management science approach is being used in many companies in India and other countries and applied to many diverse management problems, such as production scheduling, plant location product packaging etc.

Characteristics of Management Science Applications

Four primary characteristics are usually present in situations in which management science techniques are applied. These are as follows:

1. Large Number of Variables
The management problems studied is so complicated that managers need help in analyzing a large number of variables.

2. Use of Mathematical Model
The use of mathematical models the investigate the decision situation in typical in management science applications. Models are constructed to represent reality and then used to determine how the real world situation might be improved.

3. Use of a Computer
A management science application makes use of computers. There are two factors that make computers extremely valuable to the management science analyst.

Today, managers are using such management science tools as inventory control methods, network models and probability models as aid in decision making process. Since management science thought is still evolving, more and more sophisticated analytical techniques can be expected.

Critical Evaluation of Management Science Approach

Management science team presents management with an objective basis for making a decision. Management science techniques increase the effectiveness of the managers decision making. They are best suited analyzing quantifiable factors, such as expenses, sales and units of production. They are used in such activities as capital budgeting management, cash flow management, production scheduling, development of product strategies, planning for human resource development programmes, maintenance of optional inventory levels and aircraft scheduling.

However, is special widespread use for many problems, management science of today has not developed to a point where it can effectively deal with an important aspect of the organization, that is the human side of an enterprise. But no doubt that it has marvelously contributed to the solving of planning and control problems and to the progress in the areas of organizing, staffing and the leading the organisation. Anyhow some managers complain about the complicated nature of the concepts, language and techniques of management science, which are not readily understandable and not easily implemental. Some other managers indicate about the drawback of management science in that if fails to address to the psychological and Behavioural components of workplace activities because the managers are not sufficiently involved with management scientists at the initial level of developing decision making techniques and as a result the later implementation of these techniques remain often unsuccessful. There exits a lack of awareness among the management scientist regarding the problems and constraints actually faced by the managers in orgnanization, particularly because of their remoteness from the actual some of the workplace activities.

Characteristics of Management Principles

Characteristics of Management Principles

The characteristics of management principles may be examined as follows:

1. Management principles are derived from analysis of management functions and processes.

2. There are two types of principles:

Descriptive which attempt to explain and predict the behaviour of organizational members and managerial decisions and their relationships.

Normative which attempts to prescribe and evaluate the bahaviour of organizational members including the managers. They prescribed what ought to be, what is good, right and desireable.

3. The principles known today have their origin in the works of classical writers and thinkers like Taylor, Fayol and Mooney and Reiley.

4. They are universal in the sense that they are valid for most organizational under most circumstances.

5. They are flexible in nature and change with the changes in the environment in which an organization exists. It is to be noted that nothing is permanent is the landslide of management, because of the complex and unpredictable nature of human behaviour.

Need and Importance of Management Principles

Proper use of management principles will probably improve organizational performance. According to George R. Terry, Principles of management are to a manager as a table of strengths of materials is to a civil engineer. The value of the principles lies in the foundation they provide for efficient conduct of management practice. By means of principles, a manager can avoid fundamental mistakes in his job and foretell the results of his actions with confidence.

Principles help in several ways – increasing the managerial efficiency, increasing the productivity of workers, enhancing managerial knowledge and thinking, improving research in management, serving as aid to training enhancing social welfare by helping in improving the quality of life of people and community resources to best advantage of organizational members, etc.

The main purpose of management principles is to make available useful elements of a systematic theory of management, so as to improve the management practice. They provide a means of organizing knowledge and experience in management.

The above discussion clearly brings out that it is due to all the above facts that management principles have become a permanent need in today’s management world.

Various Management Principles

A number of management thinkers have formulated various management principles. Taylor and Fayol has enunciated the most important principles.

Nature of Management Principles

Meaning of Management Principles

Management principles may be defined as fundamental truths of general validity. They are helpful in predicting and understanding the results of managerial actions. The principles have been derived from the experience of managers in different fields of activity. Primarily members of the classical management school have developed them.

Management principles are intended to improve the practice of management by providing guidelines for managerial actions in the management process. They become the basis of scientific process of management.

Flexibility of Management Principles (Nature)

As indicated above, management principles are not rigid, absolute truths like rules and laws. In fact, they are flexible guides to managerial actions. Hence, while applying these principles, due attention must be given to varied and changing, circumstances because human beings who are subject of such principles are different and changeable and moreover other concerned factors are also not stable. At times it has been found in practice that the same principles is seldom applied twice in exactly the same way.

Like other social sciences, management science is also not very exact and rigid. Certain kind of flexibility is always necessary to accommodate new thinking, new demands and newly emerging circumstance. Hence the management principles are flexible and can should be adopted to meet the speciality of every situation. However as a precaution management principles should be guarded against unnecessary frequent modifications and alterations based on pure whims and frezies of individual user so that they are not distorted unwarrantedly.

In sum, it may be said that the nature of the principles of management suggests that they should be applied with fair judgement and interpretation of the available facts in a given situation.