Research Topics: Consumer Behavior Examples

CULTURE AND BUYER BEHAVIOR

Buyer Behaviour:  “Culture” is a Money Making Scam   Today’s market is characterized by highly competitive organizations which are all vying for consumer’s loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth. There are also internal factors, components working within the organization which shape the direction of the company.   Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organization reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market.   According to  and  (2001), consumer buying behaviour refers to the buying behaviour of the individuals and households who buy the goods and services for personal consumption. Consumers around the world are different in various factors such as age, income, education level and preferences which may affect the way they avail of goods and services. This behaviour then impacts how products and services are presented to the different consumer markets. There are many components which influence consumer behaviour namely: cultural, social, personal and psychological ( & , 2001). These characteristics cannot be controlled by the companies; therefore, there is a need to assess these elements in order to create an effective marketing plan.   For the business people and the people in the field of advertising and marketing, the product or service being offered could be a good start in planning and executing an effective campaign. Knowing the product and its demands in the market as well as the people who will likely avail and take advantage of the offer will open the possibilities for a campaign that will be most ideal in the market. The manufacturers and the advertisers should be conscious enough to know the characteristics of their product and its demand. There are products and services that are only utilized in a particular location because of the unique lifestyle of the people. The character of the product, if properly studied, could be made and taken as an advantage rather than a drawback in gaining a larger number of target market. The advertisers especially the people in the creative department should answer to such demands in the advertising industry.    In this age of globalization and information technology, deciding which brand to choose can be a problem. Competition is evident and intense, and the marketing and management divisions of corporations are surely giving everything they can to establish their brands. A fine and well-advertised brand might have a competitive edge from a lesser exposed brand name. But then, a lesser known brand can also have an edge over price, given that they cost less than known brands. However, in the end, the decision still lies within the consumers.   In today’s business world, the value and importance of customers is not something that should be set aside by companies. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today’s ever increasing competitive environment (, 1999).   Consumers can either be subjective or objective, testing the persuasiveness of brand names. Retail stores selling the products also play an important role in swaying the decisions of consumers. The whole package or visual appeal of the retail outlet can determine sales, or the service of the sales ladies or the clerks. Furthermore, consumers may choose particular products/brands not only because these products provide the functional or performance benefits expected, but also because products can be used to express consumers’ personality, social status or affiliation (symbolic purposes) or to fulfill their internal psychological needs, such as the need for change or newness (emotional purposes) (, 2002). These are just some of the factors that affect consumer behaviour. They have been the subject of consumer research for years, for instance, linking them with customer service and customer satisfaction, or the efficacy and persuasiveness of advertisement, etc.   According to the : “Consumers purchase products and services for the benefits derived from their use. While the study of economics focuses on outcomes, consumer behaviour emphasizes the process. Rather than assuming perfect conditions, researchers of consumer behaviour explicitly recognize the impact of situational elements on behaviour and the variance among individuals faced with the same conditions” which means that consumers buy products for the benefits they reap out of it, the study of consumer behaviour investigates the steps, or the processes involved regarding the decisions made by the consumer. Most consumers regard the purchase of real estate to be ‘high involvement goods’ that require complex decision-making,’ in purchasing real estate, such as houses, apartments or units,  consumers usually go through three key processes before they consider buying, and these are: information search, evaluation of alternatives and decision rules.   ,  and , emphasized that “consumer behaviour is best understood as problem-solving behaviour.” Consumer behaviour is related to certain motivational behaviors that are aimed towards attaining a certain goal at the end. Goals, according to developmental psychologists are “cognitive representations of desired-end status which serve as standards in the control of behaviour. Research on sensation and perception, attention, categorization, inference making, information search, memory, attitude and behaviour, attitude formation and formation, conditioning and satisfaction have been undertaken to understand consumer behaviour. In the area of sensation and perception and attention, most works are confined primarily to visual or auditory processes. Among the studies on this area include those of  and  (1994) who examined attention to packages on store shelves, as measured by eye fixations.   Based on the integrated model, culture influences behaviour through its manifestations: values, heroes, rituals, and symbols ( and , 2001). The combination of both etic and emic perspective on the manifestations can basically reveal culture’s strong relation with customer behaviour. The etic philosophy is based on the definition of culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another’’ (, 1997). On the other hand, the emic philosophy stresses upon understanding issues from the perspective of the subjects being studied ( and , 2001). As cited from  (1988), this philosophy determines the coordinates of social action and productive activity, specifying the behaviours and objects that issue from both.   Values are basically the basis of one’s attitude or restriction in attitude. Some examples of values include freedom, pleasure, inner harmony, and happiness. Heroes, on the other hand, refer to icons in the society that may have an impact on people of different levels. Examples of heroes are sports figure or pop culture figures.  and  (2001) stated that heroes may influence consumer behaviour through their association with certain products and brands. The same goes with rituals, or symbolic activities commonly performed over and over, such as bathing, tooth brushing, attending to mass, to school, etc. Their involvement on the consumption of consumer products makes them important for consumer behaviour. Finally, symbols are equally important because different cultures have different symbols that they favor i.e. language, logos, signs, etc ( and , 2001).   Meanwhile, of all the components of a marketing plan, the most essential of all these elements, but most often the most overlooked is the definition of the target market. And yet, no one can proceed to a communication plan without answering the question of who do the company have to convince to buy the product or service. Market segmentation is the identification of sub-groups within the total market that the company wants to target. This fully recognizes that buyers of any product or service category need, desire, want and expect different performance characteristics from products or services in the category. It helps the company to position the product properly and prepare marketing strategies to satisfy a more focused range of consumer needs and wants. Furthermore, it is also a factor in effectively using limited marketing resources, identifying unique market niches, improving profitability and helping to retain consumer loyalty.   Companies now face the challenge of making its target consumers respond accordingly to their marketing efforts. Those who understand its consumers’ responses will have a great competitive advantage. The starting point towards this is through the stimulus-response model of buyer behaviour which involves examining the marketing and other stimuli in the consumer’s black box that translates into buyer responses ( & , 2001). Marketing stimuli often consist of the four P’s of marketing: product, price, place and promotion while the other stimuli may include economic, technological, political and cultural factors which exist in the marketing environment. All marketing communications should be directed to a particular target. This aspect suggests that in implementing marketing communication, the company should clearly identify the targeted constituents and stakeholders, or to whom the marketing communication strategy should be directed ( and , 2002). The purpose of this aspect is for the company to create or apply communication instruments that will encourage the market to purchase or patronize the product.   It is always important to know the characteristics and nature of the products and services offered by any advertising campaign because this will guarantee the success of the marketing strategy. But knowing the product alone can be detrimental in any marketing plan if the advertisers and the manufacturers themselves have no idea of the new target market they are trying to penetrate. The fact that there are really products and services that cannot be applied or utilized in a particular country should be a constant thought and reminder to the advertisers and business organization with plans of gaining entrance and share of clients and consumers. The services and products should be correctly classified as to whether they will be sellable in the new market. The lifestyle and daily routines of the people in the new target market should be likewise considered to ensure that the products and services offered will be able to enter the new market in a different locality. Conducting researches and market studies on the purchasing power and the consumer behaviour of these people will benefit the business organization to conceptualize, transmit and channel the correct advertising message to the target. Hopefully, this will eventually attract the interest of the target audience and gain their loyalty to the product or service being made available to them.                The products or services should always be in synch with the tastes, lifestyle, economic status and purchasing power of the prospect foreign target market.  If the contrary of the case, it may also worthy to consider the time frame in which the marketing strategy and advertising plan will be duly employed and utilized in a foreign locality with different cultural orientation. Time is also the factor to be considered in conceptualizing and contextualizing a product or service innovation as well as its launching or introduction in the market. Even though the concept of the strategy is a standardized advertising campaign, the people who will be responsible in executing the said project should be sensitive enough to investigate on the local environment. The same advertising campaign does not necessarily mean that the strategy, plans and approached that will be utilized is similar. Too much generalization about a locality and the people who will be the target of the campaign may post danger on the success of the project. It is important to get close to the audience by knowing their culture.                                   References:   Credit:ivythesis.typepad.com

CULTURE AND BUYER BEHAVIOR

Buyer Behaviour: “Culture” is a Money Making Scam Today’s market is characterized by highly competitive organizations which are all v...

BENEFITS AND LIFESTYLE STUDY

EXECUTIVE BRIEF This essay utilized Heineken as the model organization to review its present market segmentation strategies and how they dealt with critical situations. From the analysis, key trends in the benefits and lifestyle study results among 20 Heineken consumers were identified; their preferences and their effectiveness in dealing with critical situations were ascertained. The paper then moved on to assess the marketing segmentation strategies of Heineken with regards to their suitability to critical situations, during which the internal capabilities of the segmentation in relation to the strategy being followed was determined also. An overall analysis of the performance and effectiveness of marketing segmentation strategies was also conducted to assess and compare the capabilities of these strategies with those of others. Gaps in marketing segmentation capabilities and environment of Heineken were then identified. Finally, several choices of strategies to improve marketing segmentation strategies of Heineken as an effective means in critical situations were recommended and evaluated by 20 respondents in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.             INTRODUCTION               In the last five years, the brewing industry has seen so much activity in terms of massive changes in the landscape of brewing companies. These changes range from mergers and acquisitions to changing consumer tastes and finally, to different branding strategies. These activities are expected to continue over the course of the next ten years.   Heineken is one of the leading companies in the world’s brewing industry in terms of the volume of sales and profitability. It has also one of the widest connections among other international brewers made possible through a global network of distributors and breweries. Heineken is managing some of the world’s leading beer brands, most notably Heineken and Amstel.  Other top selling brands Heineken manages include Cruzcampo, Zywiec and Murphy’s.  Heineken uses the name of both the company and its mainstream beer label, and its excellent marketing segmentation strategies has allowed the company to pursue an integrated marketing approach directly related to the company’s name. However, the main questions remain. Does this strategy produce more effective results than the others in terms of gaining company name recognition? Do the adapted strategies allow differentiation in the culture of the corporation to influence consumer choices? Statement of the Problem             Heineken has blossomed on its local / domestic home country and moved on to internationalize their trend to some other countries / continents through effective segmentation strategies. Hence, the causes of this success must be investigated through a benefit and lifestyle study and lessons must be learned and derived from this study. Purpose of the Study This study will be conducted in order to determine the success factors of Heineken in internationalizing their trend to other countries / continents through market segmentation, and provide meaningful lessons such as learning their effective segmentation strategies.             This study will also aim to increase the awareness and provide a better understanding on the issues and problems concerning lifestyle and benefits studies and in order to contribute an effective approach in addressing their problems. Significance of the Study If the success factors of Heineken in internationalizing their trend to other countries / continents will be determined, this study will be a benefit to other multinational companies experiencing problems and gaining ground to other parts of the world. Also, if effectiveness is supported, this study will be significant in developing underachieving multinational companies and organizations as productive and effective entities in the future. Research Questions Specifically this study will address the following questions: 1.      What significant success factors of Heineken in internationalizing their trend to other countries / continents were determined? 2.      What specific alternatives or measures can be done to help improve the market segmentation strategies of underachieving multinational companies and organizations? Assumptions The research will be based on the following assumptions: (a) all participants will be utilizing the correct procedures as outlined in the guidelines for the specific methodology employed, and (b) all participants will answer questions honestly to the best of their ability. Limitations Time will be the greatest limitation to this research, which could hinder long-term outcome objectives. Environmental factors, such as socioeconomic status, will not be controlled, and this could create many variables within the research. As this study will utilize a small sample of respondents, the results may not effectively represent the general population.   The Research Design             In order to come up with the most suitable research approaches and strategies for this study, the research process “onion” is undertaken. This is because conducting a research is like peeling the back layers of an onion—in order to come to the central issue of how to collect the necessary data needed to answer the research questions and objectives, important layers should be first peeled away. With the said process, the researcher will be able to create an outline on what measures are most appropriate to be applied in the study.  (2003) said that while it is not unusual for a researcher to first think of his research undertaking by considering whether one should, for instance, administer a questionnaire or conduct interviews, thoughts on this question should belong to the centre of the research ‘onion’. That is, in order to come to the central issue of how to collect the data needed to answer one’s research questions, there are important layers of the onion that need to be peeled away: the first layer raises the question of the research philosophy to adapt, the second considers the subject of research approach that flows from the research philosophy, the third examines the research strategy most applicable, the fourth layer refers to the time horizon a researcher applies to his research, and the fifth layer is the data collection methods to be used.             Figure 1 shows how the researcher conceptualized the research approach to be applied in this study by  (2003), in order to come up with the pertinent data needed to answer the research questions stated in the first chapter, as well as to arrive to the fulfillment of this research undertaking’s objectives.   Then again, the research philosophy that is reflected in this study is positivism. With this research philosophy, a researcher prefers to work with an observable social reality in order to come up with law-like generalizations similar to those produced by the physical and natural scientists (, 1998), and in this tradition, the researcher becomes an objective analyst, coolly making detached interpretations about those data that have been collected in an apparently value-free manner (, 2003). In addition, the emphasis is on a highly structured methodology to facilitate replication ( & , 1997) and on quantifiable observations that lend themselves to statistical analysis (, 2003). In here, the assumption is that the researcher is independent of and neither affects nor is affected by the subject of the research (, 1998; , 1998).             Meanwhile, the second layer shows that this study has undertaken a deductive approach. Accordingly, this approach has five sequential stages: deducing a hypothesis; expressing the hypothesis in operational terms; testing this operational hypothesis; examining the specific outcome of the inquiry to either confirm the theory or indicate the need for its modification; and finally, modifying the theory in the light of the findings (if necessary) (, 1993, ).        Further, the deductive approach has a number of important characteristics. First, this approach is a search to explain causal relationships between variables, which consequently leading to the development of a hypothesis. Second, it involves the collection of a quantitative data (although it can, as well, use qualitative data), and these data are important to test a hypothesis that has been previously developed. The third characteristic of a deductive approach is that it controls to allow the testing of hypothesis. However, one must remember that with this approach, it is important that the researcher is independent of what is being observed—that is, the researcher should be objective and not subjective—so that the principle of scientific strictness will be pursued, as this approach emphasizes scientific principles. (, 2003)  Also, it is important that concepts are operationalized, which will enable facts to be measured quantitatively. Finally, the deductive approach is generalization (e.g., to be able to generalize about regularities in human social behavior, one must be able to select a sufficient numerical size of samples). (, 2003) Respondents of the Study               In this study, 20 consumers of Heineken were chosen. The respondents were interviewed with the help of a questionnaire.   Data Collection   Data shall be collected from multiple sources, allowing  a number of different perspectives to be taken into consideration in the development of the recommendations.             The data sources that will be examined include: ·         A review of the appropriate research literature. This includes examining studies where customer satisfaction had been used either in a research or organizational setting. Both technical articles and “how-to” articles were included in the review; <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> An examination of the regulations and practices related to customer satisfaction in housing. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Focus groups and interviews with the consumers. During the focus groups, participants will be asked about their perceptions and preferences regarding Heineken products.</li> </ul>       Instruments used A self-administered questionnaire, or the type of questionnaire that was usually completed by respondents, was constructed by the researcher to gather the needed data (, 2003). To further enhance the study on the customer satisfaction, the researcher prepared a survey-questionnaire wherein the respondents graded each statement.             The decision was made to use a questionnaire for the data collection for this project due to the sensitivity of the information being obtained.  It was important for the respondents to be open and honest in their responses. The use of the questionnaire provided the researcher with the ability to test the views and attitudes of the respondents.             The survey-questionnaires also used open-ended questions to obtain as much information as possible about how the interviewee feels about the research topic.  Interviews took between one to two hours. The questions used during the interview were based on the research questions for this project; they have been reviewed, refined and approved by the project supervisor. The researcher designed a semi-structured interview. Here, the researcher encouraged the interviewee to clarify vague statements and to further elaborate on brief comments. The interviewer did not share his/her own beliefs and opinions. PRESENTATION OF RESULTS A total of 20 Heineken consumers were used for the data gathering process. For the purpose of gathering pertinent and reliable data, respondents of 30 years old and above were included in the sample. Of the 20 participants, the sample was divided equally according to three categories. These categories include the respondents’ gender; age; and position in the company. See table 1 for a summary description. Gender   Male 10 Female 10     Age   30-35 years old 5 36-40 years old 5 41-45 years old 5 46-50 years old 5     Occupation   Regular Employees 10 Contractual Employees 10                           Table 1 shows the descriptive summary of the 20 respondents of the study             As seen on the table, the respondents were equally divided according to the three categories as selected by the researcher. This was for the purpose of giving an equal representation of the respondents regarding the subject matter. Since the research could not afford for a much bigger sample due to time and budgetary constraints, the equal representation of respondents can represent the significant sample categories. Semi-structured Interview Results     A. Improving the current status of Heineken products   Among the ideas that the 20 consumers of Heineken products mentioned in order to further improve the current status of Heineken products include mainly the following:   <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Allocation of appropriate consumer research studies besides technical and professional training of employees</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Participation of the public consumers and private sectors in planning, financing and follow up of the Heineken products</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Unification of the planning and follow up efforts for development of the Heineken products </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Linking the Heineken products to the needs of the consumers</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Concentration on the application of the consumer research results in order to acquire the latest information regarding the needs and preferences of Heineken consumers</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Supporting the suggested changes of the consumers</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Utilizing all resources and capabilities within Heineken to improve its products</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Updating the Heineken products to match the consumers’ needs</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Directing the focus of Heineken to the products that need development </li> </ul> B.  Enhancement of Heineken products   Majority of the participants of the study evaluated that the Heineken products they purchased were comfortable to them, so there’s no need for any changes or enhancement to be done.  As shown in Figure 1, majority of the respondents strongly disagreed that the Heineken products must not be changed or enhanced. In fact, during the interview, most of the respondents observed that changing the products might even cause their popularity to be hampered.                                         Figure 1   C. Allotment for Heineken products improvement     Consumers are able to make the most of the satisfaction provided by Heineken products because of their high quality and cost-effectiveness. However, the sudden outburst of the prices of Heineken products brought about by the aftermath of unstable economic conditions seemed to be a problem for the consumers. The differences in the cultures of the consumers in different market segments were also sometimes the cause of problems for Heineken. With these things under consideration, the management of Heineken must be able to find ways to make their products even more advantageous and beneficial so their consumers in different market segments can enjoy their products.         REFERENCES                       APPENDIX HEINEKEN BENEFIT AND LIFESTYLE SURVEY     Dear Respondent,     I kindly request for your cooperation in this survey. I am currently assessing your needs and opinions regarding Heineken products in order for the company to improve its service quality. Your response will be treated with outmost confidentiality.     I.                    PROFILE OF THE RESPONDENTS   1.        GENDER   q       MALE q       FEMALE     2.        CIVIL STATUS   o       SINGLE o       Married o       Widow/widower o       Others, please specify     3.        AGE   q       23 below q       24-27 q       28-31 q       32-35 q       36-39 q       40-43 q       44-47 q       48-51 q       52 and above     4.        Educational Attainment   q       BS Degree q       BS with MA q       MA Candidate q       PHD student q       PHD Candidate q       PHD     5. EMPLOYMENT STATUS   q       Probation q       Permanent q       Casual q       On-the-job/Internship q       Others, pls. specify     QUESTIONS   <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> What other ideas do you think the management of Heineken should implement to improve the current status of its products and handle your needs and preferences effectively? </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Do you agree that some features of Heineken products need to be altered or enhanced? Why or why not? </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> If sufficient funds are available for improving the status of Heineken products, where do you think the most consideration should be allotted? </li>   Credit:ivythesis.typepad.com

BENEFITS AND LIFESTYLE STUDY

EXECUTIVE BRIEF This essay utilized Heineken as the model organization to review its present market segmentation strategies and how they...

MANAGEMENT ACCOUNTING

The Role of Management Accounting in the Firm’s Pricing Decisions                 This paper is an essay about the role of management accounting in the pricing decisions of firms. This is a research type of essay paper, which makes use of journals and textbooks to show the actual application of management accounting in the firm’s final pricing decisions. The first part is intended for the background on management accounting, to give the readers a bird’s eye view of the topic. Then a slow interconnection of the topic to pricing issues is made as it approaches the middle part of the paper. The existing relationship between the two topics is then illustrated through presentations for further and clearer evaluation of the situation to the reader. This is also a way of showing how management accounting can affect a firm’s pricing decisions. On the last part, the topic is summarized to end the discussion and to give a clear conclusion for the readers.      Management Accounting             While other branches of accounting is concerned with the considerations of accounting information of business enterprises for the use of external decision makers, managerial accounting is focused on the realm of enterprise-related accounting information for the use of a different set of decision makers – the enterprise’s management itself. Therefore, managerial accounting is the branch of accounting thought and practice concerned on providing useful information to decision-makers within the enterprise. These decisions are related to the development of resources and the exploitation of the opportunities available for the enterprise.             The boundaries of managerial accounting are not rigid.  One thing that managerial accounting and financial accounting have in common is their focus on the enterprise and its activities. Their difference, on the other hand, lies on the decision interests of the class or the decision makers that they served. Additionally, most of the decision models that have evolved for management use and for which accountants supply the necessary information inputs have been developed within the disciplines of managerial economics and managerial finance. These models are described as part of the managerial accounting due to its vital role in supplying the relevant information for decision-making. Without it, it would be hard to understand the models of management decision.             Management decisions can be divided into two types. They are the long run and the short-run decisions. Long-run decisions are defined as decisions whose outcomes commit the enterprise or have direct influence on its numerous future-period activities. The long run is thought of as a span of time sufficiently long for the planning, implementation and running of the enterprise’s significant project or program. Short-run decisions, on the other hand, are decisions whose outcomes commit the enterprise or directly influence its actions for perhaps only a year at most. The latitude available in the selection of short-run alternatives is restricted considerably by the commitments made by the enterprise in past long-run decisions.             Given the objective of profit maximization in the long-run, the success of the enterprise (management) in the long-run hinges on the ability of the management in the identification and implementation of the most promising product lines, projects, and programs within its capabilities, as well as its environmental and money-capital limitations. The active seeking of opportunities is the first requisite to success. It is done to assist, either in providing new and better products/services, or in the development of new and better means of production. The former requires at least some minimal level of involvement, in the research of present markets and consumer/industrial preferences, plus on the research on product development. On the other hand, the latter requires at least some involvement with industrial engineering as well as organizational, institutional, and behavioral research. All of these are essentially information- seeking activities contributed by specialists other than accountants. The accountants’ contribution comes into play in the selection of the most promising set among the identified alternatives. This is another important requisite to the enterprise’s success in the long run.               One essential feature of the opportunities (alternatives) in the long run is that they usually require considerable initial outlays of the enterprise’s limited money capital for implementation. These initial outlays include expenditures for things like long-lived assets to be employed in the program, legal fees, and further developmental and organizational research costs. Additional outlays are required when relating to several future periods. This enables the production of benefits in the form of cash inflows or lower total outlays compared to the programs they replace. Since long run programs generally require outlays of scarce money capital, the process of the selection of the best set among the available alternatives (opportunities) is usually referred to as capital budgeting.             This is where the role of the managerial accountant enters. Upon the decision maker’s discretion, he may perform not only the information-gathering step in the decision process but parts of the problem definition and evaluation steps as well. He also acts as the translator of the resource flows connected with a product, project, or program into financial or money flow implications.   Cost Behavior Analysis: A Flexible Tool             The discovery and application of cost and revenue behavior patterns are relevant in producing information for all types of management decisions. As noted earlier, one important task of managerial accounting is the association of financial (money) flows with the resource flows that are expected from various decision alternatives. Costs measured in money terms are associated with these alternatives in order to evaluate them in the context of the enterprise’s long-run goal, which is profit maximization.             The basis of associating these costs with particular decision alternatives is usually cost behavior patterns derived by the cost behavior analysis. A cost behavior pattern is a functional relationship between various activities or events that represent a decision alternative and the expected cost to be incurred in connection with that alternative. Cost behavior analysis, on the other hand, is the process of the discernment and the description of the forms of these cost behavior patterns.                          How are cost behavior patterns used in managerial decision making? First, the cost-behavior implications of various activities and events are used in constructing an overall cost-function for a decision alternative or variable. Then the cost function (usually together with a revenue function) is manipulated to generate decision-relevant information about the alternative or variable.             Since most of the managerial decision making focuses on the production and sales of products and services, the frequent concern of accountants is on the use of cost behavior patterns in supplying information for decisions on production and sales. This type of application is called the cost-volume-profit analysis or break-even analysis. This is frequently used in practice and is the most appropriate context in acquainting the reader with the application of cost behavior patterns.   The Translation of the Actual Production Plans into Budgets               There are many kinds of activities involved in the operations planning and the control phases of the overall cycle of short-run management decision. These two phases are best described involving a series of steps. Each of these steps is necessary in accomplishing the purpose of each phase. Accounting takes a significant part for both phases.             The major steps involve in the planning phase of the decision cycle for the short-run includes: the assignment of goals to responsibility centers; the development of plans for the operations of each center; the translation of these plans into budgets, the coordination and combining of the different budgets (making of the master budget); and the final review and possible re-planning of the master budget.             After the determination of the best feasible one among the available production plans presented, a financial representation of that plan is prepared. This is called the budget, which is the operating plan for a certain period, expressed in money terms. Accountants take the role of assistance in the formulation of budgets. This process consists of the combination of the individual unit resource requirements (based on a selected plan), with the assigned goal on the production activity. The process of budgeting relies heavily on the predictions of the cost behavior patterns.        The Master Budget             After the formulation of the budgets for all of the lowest-level responsibility centers, a process involving the combination of the said unit budgets into budgets for the higher-level responsibility centers follows. The lower-level centers are part of the higher-level ones. Then after that combination, they are put together finally to form a coordinated whole. That is what they call the master budget. It consists of a coordinated set of financial estimates for the budget period. This includes the balance sheet, income statement, and other statements deemed to be useful for the said budget.              The master budget differs from the budgets of high-level responsibility areas, it is not a “summing up” of the budgets of the lower-levels. Instead, it allows for the financial consequences of the various conflicting, major activities like production and sales.   The Final Review of the Master Budget and the Replanning             The master budget serves as a means for checking all of the individual plans. This is due to the fact that it is where the different plans for all of the activities of an enterprise is integrated, and expressed in financial terms. It does not pinpoint any potential production bottlenecks and other defects on the technical planning. However, it is useful in other ways. One case is on the careless seeking of the optimal plans for operation. The lack of rigor may not be discernible in their individual budgets due to this situation. Nevertheless, the result will turn out to be a less-than-satisfactory estimated income figure, after the combination of the budgets into the master budget.               On the other hand, certain adaptation forms are considered desirable in case the master budget turn out to be ineffective. It should only happen before the start of the operations. The exact adaptation form depends on the cause of the poor outcome. If the foreseeable cause lies either on the lack of rigorous planning on the part of the responsibility centers, or on the selection of overambitious goals by the management, a reiteration of the entire planning process is needed. For the first case, more attention must be dedicated for the selection process of the best (least-cost) plans for each subunit. While for the second case, goals that are more realistic must be assigned throughout.             On the other hand, if the cause of the frustration is beyond the management’s control in the short-run, the problem becomes a matter to be considered in the long run by the management. That is, if it is due to some identifiable internal or external constraint. Even though the initial operational plan is a failure, it is not necessarily abandoned, unless adaptation could lead to a better plan under the circumstances.          Pricing of Products and Services             Pricing involves a delicate act of balancing. The higher the prices are, the more revenue earned per unit sold. However, this will drive down the unit sales. One difficult problem here is the actual setting of prices in its exact amount in order to maximize profits. In general, however, the mark-up over cost for those products, whose customers are least sensitive to price, should be the highest. In particular, the demand for such products is termed as being price inelastic.             Managers often rely on cost-plus formulas in setting their target prices. In the approach of absorption costing, the cost base is the absorption costing unit product cost, while the mark-up is computed to cover both non-manufacturing costs as well as to provide an adequate investment return. However, costs will not be covered here and there will be no adequate return on investment unless the unit sales forecast used in the cost-plus formula is accurate. If through the application of the cost-plus formula resulted in a price that is too high, the unit sales forecast will be unattainable.             Some companies, however, make use of a different approach for pricing. Instead of starting with costs and determine the prices afterwards, they start first with the prices and then determine the allowable costs. Companies using the target costing approach used the new product’s anticipated features as well as the prices of the existing products in the market, as their basis to estimate the likeness of the new product’s market price. In order to arrive at the product’s target cost, they subtract the desired profit from the estimated market price. Thus, the responsibility of ensuring that the actual cost of the new product should not exceed the target cost is given to the team of design and development.   Conclusion             Managers have to make decisions, whether it be in the allocation of its limited resources, on pricing products, whether to drop a product line or not, or on the way of organizing its product and process. These decisions are based on information as its source. If the source (the information) turns out to be good, the decision will also turn out to be a better result. Nowadays, there is the emphasis of computer specialists on the “systems” nature of information and decisions. They argued that the way of the data development, summarization, and presentation determines the way a situation is viewed. In turn, it also determines the actions to be taken. Accounting reports, therefore, are the major source of performance information and the only source regarding the profitability information of a company. However, due to its service extended to external groups, it has not focused enough on its task of supporting managers in their full range decisions. Accuracy and validity in representing the companies’ activities are also compromised for uniformity and simplicity in its external reporting. This will further mislead the managers, resulting into the development of inappropriate strategies, which in turn, will also result into bad decisions.             A recent development solves this problem. This is the activity-based costing, which provides the management the opportunity to bring the overhead allocations into line, with the way the plant actually operates. The activities (which cause the costs) are identified in order for the products (which cause the activities) to pay for them. The activity-based costing is not considered as a radical or dramatic change. Instead, it is defined as a subtle, fine-tuning. It has the potential of improving the usefulness of accounting significantly, as a decision support system for the strategic move of the manager in rebuilding its competitiveness.             , editor of Management Accounting and director of NAA research, summarize the developments in activity-based costing. He also states that activity accounting is a technique for better understanding of costs. Therefore, every company should make improvements with the use of the activity-based costing concept. The estimation of the potential costs of running a business is difficult with the use of inaccurate information. Activity-Based Costing, therefore, is an offering of opportunity made by the accountants. Every company who wish to improve their accounting reports’ accuracy should take this in modeling their company.   References   Credit:ivythesis.typepad.com

MANAGEMENT ACCOUNTING

The Role of Management Accounting in the Firm’s Pricing Decisions This paper is an essay about the role of management a...

BUSINESS MARKETING

INTRODUCTION   Today, doing business is crucial to the needs of every  organization involved in a company and the way business integrates to their respected consumers and or buyers  in order to communicate with their business partners, to connect with their data systems and be able to transact the nature of such business successfully where the strength and reliability of business marketing process, as well as, marketing strategies will provide substantial emphasis to the implications of such differences in dealing between consumer and business to business marketing and in finding proper marketing concepts essential for growth and stability of the business per se. Moreover, many business managers are finding  time and commitment to develop business marketing strategies that could be difficult in the process of its actualization as it is tempting to push formal strategy development to the back burner and it can put the business at a disadvantage. Thus, marketing strategies help create the best marketing programs intended to give phenomenal success for  their business. Without this, marketing managers will be at risk of becoming unfocused in their marketing efforts. A company must – choose programs that will support them by integrating strategies which are useful, relevant, and valid into their plans to  achieve better business objectives within a reliable decision making process throughout the organization.     MAIN BODY There is a paradigm that merges the values with the core processes that involves to the foundation of business; it is generally possible as it can be either business to consumer (B2C) and or Business to business (B2B) where transactions are between one company and another company. Thus, it is said that B2C applies to any organization selling products/services to consumers over the market for their advantage within the B2B sales then, B2C sales are expected to improve in the future as needed amicably to deliver enough value to the customers  by finding  ways in terms of generating revenues. The upshot for marketers has been the extension of the marketing mix from the product, price, place and promotion to include people, physical evidence and process for creating a differential advantage over competitors, with the inevitable dependence for differentiation and competitive edge on branding initiatives. Through this, personnel and marketers have argued that there are relatively only minor differences between the marketing of consumer goods and industrial or business-to-business goods.           Business to Business marketing The consumer business to business dichotomy was established in the marketing literature by a number of persuasive theoretical works essentially argues that B2B markets are different from consumer markets along a number of dimensions (, 1986; , 1987). As  (1987) argues that Business to Business marketing are unique due to their derived demand, long purchase cycles, and a varying and fragmented market structure. Indeed,  (1987, ) argues that any similarities that might be identified between B2B and consumer markets are superficial, concluding that the consumer based approaches will fail in most cases due to simplifying and naïve assumptions, thus,  he argues that B2B markets must be handled differently than consumer markets per se. Henceforth,  (1978, ) argues that the ‘complexity’ of B2B markets calls for new approaches that must be different from those founded in consumer marketing. Thus, the belief that marketing in consumer and B2B firms is fundamentally different appears to have been heavily influenced by strong conceptual arguments.         Moreover, arguments developed from a general understanding that consumer and business buyer behaviors are different, and this seems to have led to the assumption that consumer and B2B marketing practices must be different by finding few differences across executive perceptions of their firm’s marketing environment and its marketing strategies. Today, major changes are occurring within both the marketing environment and business organizations. Marketing is the process of maintaining and enhancing relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met. This is done by a mutual exchange and fulfillment of promises and the ‘’relationship management constitutes the heart of business marketing’’ ( and  1998, ), as this implies that any discussion or examination of marketing practices comparing consumer and B2B firms should extend beyond the simple marketing mix model that is prevalent in the literature, to incorporate relational view of marketing.             The consumer and Business to Business organizations will have a large number of similarities in their marketing practice across the three dimensions describing the intent of marketing decisions, the managerial planning focus, and the purpose of exchange. There are similarities within other dimensions such as resource investment, customer contact and managerial level of market planning that has argued for consumer/B2B marketing differences. The similarities in practice encompass views of marketing as the current business practices of both consumer and B2B firms involve managing the marketing mix to attract customers and utilizing technology to enhance customer relationships even if some differences do emerge across contexts and that marketing practices are different across consumer and B2B firms within the importance of marketing strategy in maintaining business, as it enriches people in understanding business marketing in the context of firms serving consumer and business markets. On the other side, buyer market structure, demand patterns while buyer’s behavior may be different across firms between consumer and B2B marketing practice in a business marketing environment.           The key differences between Business to Business and Business to Consumer in terms of Marketing The Market Size Consumer markets are measured in terms of ‘millions’, while there are only few Business to Business firms which have customer bases over ‘thousands’ that can be significantly high in the consumer market.   The Buying Process   In  business market, the buying process is longer and involves many people, as it is not unusual to have a month buying cycle involving only a few people as both decision makers and influencers.   The Selling Process   Hence, business to business sales organizations are distinguished by well-paid sales people, distributors and business partners who are not only engaged in the selling but in the fulfillment of the product services.           The Cost of  Sale   A complex solution may require several calls to close a sale plus the advertising and marketing expense to generate inquiries and qualify such leads.   The Value of  Sale   Balancing out the cost of Business to Business selling is the value of the sale and that the initial transaction value is measured in hundreds of dollars and the likelihood of on-going sales is high.   Data Quality   In general, the quality of Business to Business data is below consumer standards as the research indicates that 72 percent of business people have changes in their business during a 12 month time frame.               Lead Generation vs. Sale   Most Business to Business campaigns are devoted to generation of an inquiry that is qualified to a lead. In consumer marketing only a small fraction of communications are for the leading generation while the majority is for direct sale having the emphasis on creating offers used in consumer programs.   The Differences Between business-to-business and consumer marketing By: Here are some important factors that set business-to-business marketing apart from consumer marketing: The business buyer wants to buy Most consumer advertising offers people some products they might enjoy, but not necessary needed. In   business-to-business marketing, the business buyer wants to buy. Indeed, all business enterprises must routinely buy products and services that help them stay profitable and successful with the existence of the purchasing agent that functions in purchasing things.     The business buyer is sophisticated Business-to-business copy talks to a sophisticated audience as the typical reader has a high interest in understanding the product and its use. This realization makes business-to-business researchers somewhat more humble than their consumer counterparts. The business buyer will read a lot of copy The business buyer is an information seeker, constantly on the lookout for information and advice that can help the buyer do the job better, increase profits, or advance his career. A multi-step buying process In business to business direct marketing, the concept of control is non-existent, combined with the efforts of the sales people to turn a cold lead into a paying customer.           Multiple buying influences Many people influence the decision – from the purchasing agent and company president, to technical, professionals, and end-users. Each of these audiences has different concerns and criteria by which they judge you. To be successful, your copy must address the needs of all the parties involved within the decision. In many cases, this requires separate mailings to  different people within an organization. Business products are more complex Most business products and their applications are more complex than consumer products. In short, in business to business marketing, the rules are different in the ways of increasing response and profits in the exciting and challenging marketplace. Furthermore, the key implications for marketing strategy in a business marketing organization are as follows. First, it is important to recognize that B2B marketing is not fundamentally different from consumer marketing and it is important to understand both similarities and differences in marketing practice across contexts, including why different approaches to marketing are being practiced, how multiple approaches can be practiced simultaneously and how these practices might be influenced by other market characteristics.   Secondly, to accurately depict and understand contemporary marketing practices, theoretical frameworks in a full spectrum of marketing approaches and not rely on the relational paradigm as the marketing environment continues to evolve to reflect new developments in marketing strategy practice and research. Managers must be sensitive to the knowledge, resources and systems’ underlying each approach as it is likely that consumer and B2B firms might learn from one another on their ongoing development of broader marketing capacity with a narrow focus that will include marketing strategies and marketing programs to better build client business as well as build awareness and interest with consumers. By means of keeping business marketing strategies in mind as sectors will choose marketing programs, it will resulted in making thorough adjustments; thus providing better foundation to the business as it grow.                       CONCLUSION   Therefore, successful business companies need to make certain that their customers will be satisfied with the services they have received from them because: customers are the most important part of any positive outcome of the companies and are essential in determining a successful business organization. Customers will support the product and they will continue buying it if they are satisfied. For me, business ‘marketing is marketing’ with common objectives, and there are tools that can be irrespective of the market strategies being used per se. However, the basic business to business marketing process is applied differently, in order to tackle the characteristics of  industrial business to business products, target markets, as well as, marketing managers respectively.                       RECOMMENDATIONS There are needs to have the application of such principles in business marketing and be able to have tests with consumers in markets that are undergoing similar changes. The importance to adhere to such multi-country studies  can help to separate the effects of the level of consumerism development, cultural values, ethical philosophies, beliefs about business and other market and consumer characteristics. Moreover, to identify other sources of cross-cultural differences such as possible response set biases. In the rapid development of marketing practices and consumerism movements in marketing economy, the evolution of consumer attitudes and beliefs and their implications for marketing management  gives continuous development of relevant strategies in business marketing, despite of frequent ethical problems which involve the consumers, Few have considered the role of consumer perceptions in theories of business and marketing ethics. Thus, the effects of consumer attitudes toward marketing on their behavior and satisfaction need to be defined in a broader context with a theoretical framework that examines their relationships with other relevant concerns. Consumer perceptions of many specific marketing practices, such as sales promotions, are virtually unknown in the changes of economy ( and , 1998).       There are needs to have further research to be able to investigate whether consumer responses to evaluative questions about marketing or are grounded in cultural values and beliefs ( ., 1990) and how cultural differences in idealism would influence consumers’ affective evaluations of marketing as it provides the fruitful avenue for future research.                                     REFERENCES   Credit:ivythesis.typepad.com

BUSINESS MARKETING

INTRODUCTION Today, doing business is crucial to the needs of every organization involved in a company and the way business integ...