Free Abstract on Micro Marketing

What is Micro-marketing?

Micro-marketing refers to the customization of marketing mix variables to the store-level. This paper shows how prices can be profitably customized at the store-level, rather than adopting a uniform pricing policy across all stores. Historically, there has been a trend by retailers to consolidate independent stores into large national and regional chains. This move toward consolidation has been driven by the economies of scale associated with these larger operations. However, some of these large chains have lost the adaptability of independent neighborhood stores. Micro-marketing represents an interest on the part of managers to combine the advantages of these large operations with the flexibility of independent neighborhood stores. A basis for these customized pricing strategies is the result of differences in inter brand competition across stores. These changes in inter brand competition are measured using weekly store-level scanner data at the product level. Obviously, this presents a huge estimation problem, since we wish to measure substitution between each product at a store-level. For a chain with 100 stores and 10 products in a category we would need to estimate over 100,000 parameters. To reliably estimate these individual store differences we phrase our problem in a hierarchical Bayesian frame-work. Essentially, each store-level parameter can be thought of as a combination of chain-level and random store-specific effects. The improvement in estimating this model comes from exploiting the common chain-level component. In addition, we relate these store-specific changes to demographic and competitive characteristics of the store's trading area, which helps explain why these differences are present. These estimated differences in price response are in turn used to set store-level prices. To simplify and focus the problem we limit our attention to everyday price changes (i.e., the prices of products that are not advertised). There are many marketing variables that can be adjusted at a store-level (e.g., promotions and product assortments); the reason we concentrate upon everyday pricing is driven by its importance in the marketing mix, that most profits are earned on products sold at their everyday price, and the amenability of everyday prices to store-level customizations. A limitation of this approach is that it yields only a partial solution to the retailer's global optimization problem. A challenge for the retailer in implementing micro-marketing pricing strategies is to retain a consistent image while altering prices that adapt to neighborhood differences in demand. Our approach is to search for price changes that leave image unchanged. We argue that a sufficient condition for holding the input to store image constant from everyday pricing is to hold average price and revenues at their current levels. We implement this condition by introducing constraints into the profit maximization problem. Future research into store choice may yield more efficient conditions. A benefit of holding the retailer's image constant is that it does not require costly new information about competitors and promotional activity. Instead, retailers are able to derive these store-level customizations based largely upon scanner data. This is very advantageous since this information is already being collected and is readily available. Our results indicate that micro-marketing pricing strategies would be profitable and could increase gross profit margins by 4 percent to 10 percent. When these gross profit gains are considered after administrative and operating costs are taken into account, they could increase operating profit margins by 33 percent to 83 percent. These gains come from encouraging consumers through everyday price changes to switch to more profitable bundles of products, and not through overall price changes at the chain-level. These results show that the information contained in the retailer's store-level scanner data is an under-utilized resource. By exploiting this information using newer and more powerful computational techniques managers can better appreciate its value. The implication is that profits could be increased and gains can be made by using this information as the basis for micro-marketing.

Keywords: Micro-marketing, customization, Consumer-oriented marketing

Source:

  Alan L. Montgomery, Marketing Science. Vol. 16, No. 4 (1997), pp. 315-337, Published by: INFORMS. Article Stable URL:http://www.jstor.org/stable/184229

Capital Expenditure and Revenue Expenditure

Capital Expenditure

Capital expenditures are those expenditure which normally occur at the time of acquiring fixed assets, they are non-recurring in nature and utility of which can be enjoyed by the firm or the organisation for more than on accounting year. Capital expenditure maximize the value of assets, while preparing final accounts of the organisation it is shown in Assets side of the Balance Sheet and not in Profit and Loss Account. 

Some of the example of Capital Expenditure are;

Installation Charges on machinery, Extension of Building, Addition to library books etc.

One-line Definition: Expenditure which add something in the value of fixed assets, is known as Capital Expenditure.

Revenue Expenditure

Revenue expenditures are those expenditure which normally take place to maintain the day to day operation of the firm or the organisation, they are recurring in nature and utility of which is enjoyed by the firm within accounting year. Revenue Expenditure are essential for smooth running of the organisation, it does not maximize the value of the assets of the organisation, while preparing final accounts of the organisation it is shown in Debit (Dr.) side of Profit and Loss Account and not in Balance Sheet.

Some of the Example of Revenue expenditure are;

Depreciation, Salary and wages, Fuel etc.

One-line Definition: 
Expenditure which does not add something in the value of  fixed assets, is known as Revenue Expenditure

Following example can explain better the concept of  Capital Expenditure and Revenue Expenditure;

Suppose you have car, you have added fuel of Rs. 1000/-, this is a revenue expenditure, instead if you replace its Tyre and tube, it is capital expenditure, because its utility can be enjoyed for more than one year.

Will RBI Reject Currency Notes if Written Something Accross It?

RBI Guideline to Reject Currency Notes if written a slogan or anything else.

Photo credit: http://www.rbi.org.in

Since last couple of weeks I have been seeing a continuous facebook post people saying and bothering that "RBI is going to reject all currencies/Notes from 1st January 2014 if anyone writes something across it or if it is already written." 

Much of the discussion have been made on this issue, but reality is that RBI has only warned people not to write anything on currencies and to keep it clean. A Banker cannot reject its own currency only on the ground that it is pre-written with a slogan or else. However, if you write something in front of a banker it will be rejected. 

Reality is that Bank cannot summarily reject all such currencies, what about those currencies we have, pre-written by someone else?

 In fact RBI tries to make us aware not to write any thing on a note. According to Deputy Governor K C Chakrabarty "If anyone writes anything on the currency note at the front of a banker then he may deny to accept that note so that this mistake may not be repeated again by that person."

He further stated "Our aim is to create awareness among the people that they should not write anything on the currency notes and need to keep the currency notes clean,"

Money Market and Capital Market

Basic Concept of Money markets and capital markets | Meaning of Money Market | Definition of Money market | Meaning of Capital Market | Definition of Capital market | Difference between money markets and capital markets |

 Money Market

What is money market??

Source: studypoints.blogspot.com

Money market (मुद्रा बाजार) is the trade in short-term loans between commercial banks and other financial institutions, in other words money market in that part of a financial market which deals in the borrowing and lending of short term loans generally for a period of one year (less than or equal to 365 days). Money market is a mechanism to clear short term monetary transactions in an economy.

Unlike organized markets (such as stock exchanges) money markets are largely unregulated and informal where most transactions are conducted over phone, fax, or online. Long-term borrowing and lending markets are called capital markets.

Definition of Money market as per RBI

 "The money market is the centre for dealing mainly of short character, in monetary assets; it meets the short term requirements of borrowers and provides liquidity or cash to the lenders. It is a place where short term surplus investible funds at the disposal of financial and other institutions and individuals are bid by borrowers, again comprising institutions and individuals and also by the government."

Definition of Money market as per Investopedia

'Money Market': The money market is used by a wide array of participants, from a company raising money by selling commercial paper into the market to an investor purchasing CDs as a safe place to park money in the short term. The money market is typically seen as a safe place to put money due the highly liquid nature of the securities and short maturities, but there are risks in the market that any investor needs to be aware of including the risk of default on securities such as commercial paper.

Capital Market

What is Capital Market??

Capital Market (पूँजी बाजार) is the part of a financial system concerned with raising capital by dealing in shares, bonds, and other long-term investments. Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions.

Wikipedia Definition of Capital Market 

Capital markets are financial markets for the buying and selling of long-term debt- or equity-backed securities. These markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Financial regulators, such as the UK's Bank of England (BoE) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their jurisdictions to protect investors against fraud, among other duties.

Definition of Capital Market  as per Investopedia

A market in which individuals and institutions trade financial securities. Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.

Capital Market Types

There is two typs of cpital market

1. Primary market

The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue.

2. Secondary market

The secondary market, also known as the aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold.

             

What is the difference between Money Market and Capital Market?

 Money markets and capital markets are parts of financial markets. Money market is distinguished from capital market on the basis of the maturity period, credit instruments and the institutions:

1. Time Period:

In money market only short-term finance (i.e., for 365 days or less) are made in the lending and borrowing, while the capital market deals in the lending and borrowing of long-term finance (i.e., for more 365 days).

2. Usage of Credit Instruments:

Money market uses credit instruments like call money, collateral loans, acceptances, bills of exchange. whereas,  the main instruments used in the capital market are stocks, shares, debentures, bonds, securities of the government.

3. Nature of Credit Instruments:

The credit instruments dealt with in the capital market are more heterogeneous than those in money market. Some homogeneity of credit instruments is needed for the operation of financial markets. Too much diversity creates problems for the investors.

4. Institutions:

Important institutions operating in the' money market are central banks, commercial banks, acceptance houses, non-banking financial institutions, bill brokers, etc. Important institutions of the capital market are stock exchanges, commercial banks and non-banking institutions, such as insurance companies, mortgage banks, building societies, etc.

5. Purpose of Loan:

The money market meets the short-term credit needs of business; it provides working capital to the industrialists. The capital market, on the other hand, caters the long-term credit needs of the industrialists and provides fixed capital to buy land, machinery, etc.

6. Degree of Risk Involved:

The degree of risk is fewer in the money market. while there is comparatively higher risk involved in capital market. The maturity of one year or less gives little time for a default to occur, so the risk is minimized. Risk varies both in degree and nature throughout the capital market.

7. Primary Function:

The primary function of money market is that of liquidity adjustment, whereas function of capital market is pushing capital to work, preferably to long-term, secure and productive employment.

8. Relation with RBI (Central Bank):

The money market is closely and directly linked with RBI or central bank of the country. The capital market feels central bank's influence, but mainly indirectly and through the money market.

9. Market Regulation:

In the money market, commercial banks are closely regulated. In the capital market, the institutions are not much regulated.

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What is 'Money Laundering'

 'Money Laundering' is a process of generating money from criminal activities or otherwise and making them appear legal. You may say it as conversion of Black money into white money.

   

Source:http://fiwebelize.com/belize-in-money-laundering-scheme-originating-from-argentina/ In fact, 'Money Laundering' is the process to show money obtained through illegal source as legitimate source. Usually it is raised from criminal activity, drug trafficking, terrorist activity or other serious crimes. 'Money Laundering' includes any type of predicate crime ranging from tax evasion and forgery, to drug- and people-trafficking. 'Money Laundering' As per Wikipedia,

Money laundering is the process of concealing sources of money. Money evidently gained through crime is "dirty" money, and money that has been "laundered" to appear as if it came from a legitimate source is "clean" money. Money can be laundered by many methods, which vary in complexity and sophistication.

'Money Laundering' As per Investopedia

Definition of 'Money Laundering

'The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.

Investopedia explains 'Money Laundering'

Some estimate the size of the problem is over $500 billion annually. Often thought of as a victimless crime, money laundering is a very serious issue. Without it, international organized crime would not be able to function.