Break Even Analysis

                                                                                                

If you can accurately forecast your costs and sales, conducting a break even analysis is a matter of simple math. A company has broken even when its total sales or revenues equal its total expenses. At the break even point, no profit has been made, nor have any losses been incurred. This calculation is critical for any business owner, because the break even point is the lower limit of profit when determining margins.

Defining Costs: - There are several types of costs to consider when conducting a break even analysis, so here’s a refresher on the most relevant.

·         Fixed costs: These are costs that are the same regardless of how many items you sell. All start-up costs, such as rent, insurance and computers, are considered fixed costs since you have to make these outlays before you sell your first item.

·         Variable costs: These are recurring costs that you absorb with each unit you sell. For example, if you were operating a greeting card store where you had to buy greeting cards from a stationary company for $1 each, then that dollar represents a variable cost. As your business and sales grow, you can begin appropriating labor and other items as variable costs if it makes sense for your industry.

Setting a Price: - This is critical to your break even analysis; you can’t calculate likely revenues if you don’t know what the unit price will be. Unit price refers to the amount you plan to charge customers to buy a single unit of your product.

Psychology of Pricing: Pricing can involve a complicated decision-making process on the part of the consumer, and there is plenty of research on the marketing and psychology of how consumers perceive price. Take the time to review articles on pricing strategy and the psychology of pricing before choosing how to price your product or service.

Pricing Methods: There are several different schools of thought on how to treat price when conducting a break even analysis. It is a mix of quantitative and qualitative factors. If you’ve created a brand new, unique product, you should be able to charge a premium price, but if you’re entering a competitive industry, you’ll have to keep the price in line with the going rate or perhaps even offer a discount to get customers to switch to your company.

One common strategy is "cost-based pricing", which calls for figuring out how much it will cost to produce one unit of an item and setting the price to that amount plus a predetermined profit margin. This approach is frowned upon since it allows competitors who can make the product for less than you to easily undercut you on price. Another method, referred to by David G. Bakken of Harris Interactive as "price-based costing" encourages business owners to "start with the price that consumers are willing to pay (when they have competitive alternatives) and whittle down costs to meet that price." That way if you encounter new competition, you can lower your price and still turn a profit. This presentation from Harris Interactive offers a further explanation of these methods, and About.com offers an overview of common pricing methods.

The formula: To conduct breakeven analysis, take your fixed costs, divided by your price, minus your variable costs. As an equation, this is defined as:

Breakeven Point = Fixed Costs / (Unit Selling Price - Variable Costs)

This calculation will let you know how many units of a product you’ll need to sell to break even. Once you’ve reached that point, you’ve recovered all costs associated with producing your product (both variable and fixed). Above the break even point, every additional unit sold increases profit by the amount of the unit contribution margin, which is defined as the amount each unit contributes to covering fixed costs and increasing profits. As an equation, this is defined as:

Unit Contribution Margin = Sales Price - Variable Costs

Recording this information in a spreadsheet will allow you to easily make adjustments as costs change over time, as well as play with different price options and easily calculate the resulting break even point. You could use a program such as Excel’s Goal Seek, if you wanted to give yourself a goal of a certain profit, say $1 million, and then work backwards to see how many units you would need to sell to hit that number.

Limitations: - It is important to understand what the results of your break even analysis are telling you. If, for example, the calculation reports that you would break even when you sold your 500th unit, decide whether this seems feasible. If you don’t think you can sell 500 units within a reasonable period of time (dictated by your financial situation, patience and personal expectations), then this may not be the right business for you to go into. If you think 500 units is possible but would take a while, try lowering your price and calculating and analyzing the new break even point. 

Resource Management - Basics

A resource is a source or supply from which benefit is produced. Typically resources are materials, energy, services, staff, knowledge, or other assets that are transformed to produce benefit and in the process may be consumed or made unavailable. Benefits of resource utilization may include increased wealth, meeting needs or wants, proper functioning of a system, or enhanced well being. From a human perspective a natural resource is anything obtained from the environment to satisfy human needs and wants.

Definition of Economic Resources

Economic resources are the factors used in producing goods or providing services. In other words, they are the inputs that are used to create things or help you provide services. Economic resources can be divided into human resources, such as labor and management, and nonhuman resources, such as land, capital goods, financial resources, and technology.

Importance of Economic Resources

An economy is a system of institutions and organizations that either help facilitate or are directly involved in the production and distribution of goods and services. Economic resources are the inputs we use to produce and distribute goods and services. The precise proportion of each factor of production will vary from product to product and from service to service, and the goal is to make the most effective use of the resources that maximizes output at the least possible cost. Misapplication or improper use of resources may cause businesses, and even entire economies, to fail.

Resource Management

Definition : The process of using a company's resources in the most efficient way possible. These resources can include tangible resources such as goods and equipment, financial resources, and labor resources such as employees.

Resource management is the efficient and effective deployment and allocation of an organization’s resources when and where they are needed. Such resources may include financial resources, inventory, human skills, production resources, or information technology. Resource management includes planning, allocating and scheduling of resources to tasks, which typically include manpower, machines, money and materials. Resource management has an impact on schedules and budgets as well as resource leveling and smoothing.

In order to effectively manage resources, organizations must have data on resource demands forecasted by time period into the future, the resource configurations that will be required to meet those demands and the supply of resources, again forecasted into the future. Forecasts should be as far out as is reasonable. Resource leveling, as it relates to inventory, is a resource management technique aimed at keeping the stock of resources on hand level, reducing both excess inventories and shortages. In project management, resource leveling is scheduling decisions, which are driven by resource management concerns, such as limited resource availability. As opposed to leveling, resource smoothing may not delay the project completion date, only particular activities within their float.

Many organizations use professional services automation software tools to make resource management tasks more efficient and effective. The automated tools may include time-sheet software and employee time tracking software, which calculate skill sets, experience and workload in selecting the most skilled employee in an organization to handle any specific project. This enables the organization to forecast future staffing requirements prior to project implementation.

Tourism Marketing

Marketing Concept Marketing is a human activity directed at satisfying needs and wants through exchange process. According to the British Institute of Management “Marketing is the management function which organizes and directs all those business activities involve in assessing and converting customers purchasing power into effective demand for a specific product or service and in moving the product or service to the final customer or user so as to achieve the profit target or other objectives set by the company.” Marketing are based on two principles: 1} fulfilling the community’s needs for goods and services, determining the consumer’s needs and meeting them. 2} the company must make a reasonable profit while satisfying the needs of the customer. There are three important aspects of marketing concept. 1) Customer Orientation: - this concept indicates mainly to more customers’ participation and profit making. 2) Dual-core Marketing: - this concept indicates that the first job of marketing is to identify the need of the buyer and then increase those wants through different type of promotion. 3) Integrated Marketing: - not only consumer orientation in enough but the company need to develop their infrastructure to provide best of the services. Facilities of marketing concepts:- It can give a proper view of the market. Then it will be easier to divide the market in different segments which will allow setting best promotional activity. It can help to identify the potential buyer. It can show the way to more profit through customer orientation. It also helps to identify the way to develop the quality of products or services. Marketing Process Market analysis Market research Market segmentation Product formulation Pricing Place of distribution Promotional activity the 5th ‘P’ – People, Process and Physical Factors

Product Life Cycle

Product Life Cycle (PLC) The idea of the Product Life Cycle was first developed in 1965 by Theodore Levitt in an article entitled “Exploit the Product Life Cycle” published in the Harvard Business Review on 1 November 1965. For a business, having a growing and sustainable revenue stream from product sales is important for the stability and success of its operations. The Product Life Cycle model can be used by consultants and managers to analyse the maturity stage of products and industries. Understanding which stage a product is in provides information about expected future sales growth, and the kinds of strategies that should be implemented.

Product Life Cycle model: The “Product Life Cycle” is the name given to the stages through which a product passes over time. The classic Product Life Cycle has four stages: 1} Market introduction stage. 2} Growth stage. 3} Mature stage. 4} Saturation and decline stage

1 Market introduction stage At the market introduction stage the size of the market, sales volumes and sales growth are small. A product will also normally be subject to little or no competition. The primary goal in the introduction stage is to establish a market and build consumer demand for the product. There may be substantial research and development costs incurred in getting a product to the market introduction stage, for example, thinking of the product idea, developing the technology, determining the product features and quality level, establishing sufficient manufacturing capacity, preparing the product branding, ensuring trade mark protection, etc. Marketing costs may be high in order to test the market, launch and promote the product, develop a market for the product, and set up distribution channels. The market introduction stage is likely to be a period of low or negative profits. As such, it is important that products are carefully monitored to ensure that sales volumes start to grow. If a product fails to become profitable it may need to be abandoned.

Some of the considerations in the introduction stage include:

Product development: research and development of the basic technology and product concept, determining the product features and quality level.

Pricing: should penetration pricing or a skimming price strategy be used? A skimming price strategy might be appropriate where there are very few competitors.

Distribution: distribution might be quite selective until consumer acceptance of the product can be achieved.

Promotion: marketing efforts are aimed at early adopters, and seek to build product awareness and to educate potential consumers about the product.

Features: - 1. Costs are high 2. Slow sales volumes to start 3. Little or no competition - competitive manufacturers watch for acceptance/segment growth losses 4. Demand has to be created 5. Customers have to be prompted to try the product 6. Makes no money at this stage

2 Growth Stage If the public gains awareness of a product and consumers come to understand the benefits of the product and accept it then a company can expect a period of rapid sales growth, enter the “Growth Stage”. In the Growth Stage, a company will try to build brand loyalty and increase market share. Profits are driven by increased sales volume (due to growth in market share as well as an increase in the size of the overall market). Profits might also be driven by cost reductions gained from economies of scale, and perhaps more favourable market prices. Competition in the Growth Stage remains low, although new competitors are expected to enter the market. When competitors enter the market a company might be subject to price competition and increase its marketing expenditure.

Some of the considerations in the Growth Stage include:

Product improvement: product quality might be improved, additional features and support services added, and packaging updated.

Pricing: if consumer demand is high the price might be maintained at a high level.

Distribution: distribution channels might be added as consumer demand increases.

Promotion: promotion is aimed at a broader audience. A company might spend a lot of resources on promotion during the Growth Stage to build brand loyalty.

Features: - 1. Costs reduced due to economies of scale 2. Sales volume increases significantly 3. Profitability begins to rise 4. Public awareness increases 5. Competition begins to increase with a few new players in establishing market 6. Increased competition leads to price decreases

3 Maturity Stage When a product reaches maturity, sales growth slows and sales volume eventually peaks and stabilises. This is the stage during which the market as a whole makes the most profit. A company’s primary objective at this point is to defend market share while maximising profit. In this stage, prices tend to drop due to increased competition. A company’s fixed costs are low because it is has well established production and distribution. Since brand awareness is strong, marketing expenditure might be reduced, although increased marketing expenditure might be needed to retain market share and fight increasing competition. Expenditure on research and development is likely to be restricted to product modification and improvement, and perhaps research into improved production efficiency and product quality.

Some considerations for the mature product market include:

Product differentiation: increased competition in the mature product market means that a company must find ways to differentiate its product from that of competitors. Strong branding is one way to do this.

Pricing: prices may be reduced because of increased competition. Firms in the market should be careful not to start a price war.

Distribution: distribution intensifies and incentives may be offered to encourage preference to be given over competing products.

Promotion: promotion will focus on emphasising product differences and creating/maintaining a strong brand.

Features: - 1. Costs are lowered as a result of production volumes increasing and experience curve effects 2. Sales volume peaks and market saturation is reached 3. Increase in competitors entering the market 4. Prices tend to drop due to the proliferation of competing products 5. Brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down

4 Saturation and decline stage A product enters into decline when sales and profits start to fall. The market for that product shrinks which reduces the amount of profit available to the firms in the industry. A decline might occur because the market has become saturated, the product has become obsolete, or customer tastes have changed. A company might try to stimulate growth by changing their pricing strategy, but ultimately the product will have to be re-designed, or replaced. High-cost and low market share firms will be forced to exit the industry.

As sales decline, a company has three strategy options: · Hold: maintain production and add new features and find new uses for the product. Reduce the cost of manufacturing (e.g. move manufacturing to a low cost jurisdiction). Consider whether there are new markets in which the product might be sold. · Harvest: continue to offer the product, reduce marketing expenditure, and sell possibly to a loyal niche segment of the market. · Divest: Discontinue production, and liquidate the remaining inventory or sell the product to another firm.

Some considerations for a declining market include:

Product consolidation: the number of products may be reduced, and surviving products rejuvenated.

Price: prices may be lowered to liquidate inventory, or maintained for continued products.

Distribution: distribution becomes more selective. Channels that are no longer profitable are asked out.

Promotion: Expenditure on promotion is reduced for products subject to the Harvest and Divest strategies.

Features: - 1. Costs become counter-optimal 2. Sales volume decline or stabilize 3. Prices, profitability diminish 4. Profit becomes more a challenge of production/distribution efficiency than increased sales.

It is claimed that every product has a life cycle. It is launched; it grows, and at some point, may die. A fair comment is that - at least in the short term - not all products or services die. Jeans may die, but clothes probably will not. Legal services or medical services may die, but depending on the social and political climate, probably will not. Even though its validity is questionable, it can offer a useful 'model' for managers to keep at the back of their mind. Indeed, if their products are in the introductory or growth phases, or in that of decline, it perhaps should be at the front of their mind; for the predominant features of these phases may be those revolving around such life and death. Between these two extremes, it is salutary for them to have that vision of mortality in front of them. However, the most important aspect of product life-cycles is that, even under normal conditions, to all practical intents and purposes they often do not exist (hence, there needs to be more emphasis on model/reality mappings). In most markets the majority of the major brands have held their position for at least two decades. The dominant product life-cycle, that of the brand leaders which almost monopolize many markets, is therefore one of continuity. In the criticism of the product life cycle, Dhalla & Yuspeh state: ...clearly, the PLC is a dependent variable which is determined by market actions; it is not an independent variable to which companies should adapt their marketing programs. Marketing management itself can alter the shape and duration of a brand's life cycle. Thus, the life cycle may be useful as a description, but not as a predictor; and usually should be firmly under the control of the marketer. The important point is that in many markets the product or brand life cycle is significantly longer than the planning cycle of the organisations involved. Thus, it offers little practical value for most marketers.

Cash Flow and Fund Flow

Cash flow simply means a factual presentation of cash inflows and outflows. This will give a clear picture of cash and cash equivalents movement during a period of time. Cash flow statement shows the actual cash flow of a company. This summaries the data of cash or cash related activities only. On the other side fund flow is broader term which never confine to cash movements only but this will show the sources & application of funds and its movements over a period of time. The major key aspect of fund flow is its working capital presentation. Business operations can easily be analysed through pointing out the movements of working capital. The key decisions of management which affect capital structure can be planned by utilising data presented in fund flow statement through making a comparison of working and fixed capital which will enable progressive growth in prospective environment. Funds flow statements shows that where the funds have been generated & where they have been utilised. Thus a fund means current assets & currents liabilities of company. If current assets are more that current liabilities that working capital of a company will be increased & if current liabilities are more that current Assets it will be decrease. Thus fund flow shows the reason of change in working capital. This is a statement of sources & uses of application of funds. The sources are funds from operation, sale of fixed assets, issue of share capital & debenture, on operating receipts.

Management information system

Definition: {1} “An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. In a way it is a documented report of the activities those were planned and executed.”

{2} “ It is a computer system designed to help managers plan and direct business and organizational operations.

{3} “ MIS refers broadly to a computer-based system that provides managers with the tools for organizing, evaluating and efficiently running their departments.

When information systems are designed to provide information needed for effective decision making by managers, they are called management information systems. MIS is a formal system for providing management with accurate and timely information necessary for decision making. The system provides information on the past, present and project future and on relevant events inside and outside the organization. It may be defined as a planned and integrated system for gathering relevant data, converting it in to right information and supplying the same to the concerned executives. The main purpose of MIS is to provide the right information to the right people at the right time. The Concept of management information systems originated in the 1960s and become the byword of almost all attempts to relate computer technology and systems to data processing in business. During the early 1960s, it became evident that the computer was being applied to the solution of business problem in a piecemeal fashion, focusing almost entirely on the computerization of clerical and record – keeping tasks. The concepts of management information system were developed to counteract such in efficient development and in effective use of the computer.

The MIS concept is vital to efficient and effective computer use in business of two major reasons:

[1] It serves as a systems framework for organizing business computer applications. Business applications of computers should be viewed as interrelated and integrated computer – based information systems and not as independent data processing job.

[2] In emphasizes the management orientation of electronics information processing in business. The primary goal of computer based information systems should be the processing of data generated by business operations.

An MIS provides the following advantages.

1. It Facilitates planning: MIS improves the quality of plants by providing relevant information for sound decision – making. Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations.

2. In Minimizes information overload: MIS change the larger amount of data in to summarized form and there by avoids the confusion which may arise when managers are flooded with detailed facts.

3. MIS Encourages Decentralization: Decentralization of authority is possibly when there is a system for monitoring operations at lower levels. MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures.

4. It brings Co ordination: MIS facilities integration of specialized activities by keeping each department aware of the problem and requirements of other departments. It connects all decision centers in the organisation.

5. It makes control easier: MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance. The used computers has increased the data processing and storage capabilities and reduced the cost.

6. MIS assembles, process, stores, Retrieves, evaluates and disseminates the information.

Types of Information Management Systems

Document management system (DMS) The DMS is focused primarily on the storage and retrieval of self-contained electronic data resources in the document form. Generally, The DMS is designed to help the organizations to manage the creation and flow of documents through the provision of a centralized repository. The workflow of the DMS encapsulates business rules and metadata.

Content management system (CMS) The CMS assist in the creation, distribution, publishing, and management of the enterprise information. These systems are generally applicable on the online content which is dynamically managed as a website on the internet or intranet. The CMS system can also be called as ‘web content management’ (WCM).

Library management system (LMS) Library management systems facilitate the library technical functions and services that include tracking of the library assets, managing CDs and books inventory and lending, supporting the daily administrative activities of the library and the record keeping.

Records management system (RMS) The RMS are the recordkeeping systems which capture, maintain and provide access to the records including paper as well as electronic documents, efficiently and timely.

Digital imaging system (DIS) The DIS assists in automation of the creation of electronic versions of the paper documents such as PDFs or Tiffs. So created Electronic documents are used as an input to the records management systems.

Learning management system (LMS) Learning management systems are generally used to automate the e-learning process which includes the administrative process like registering students, managing training resources, creating courseware, recording results etc.

Geographic information system (GIS) The GIS are special purpose, computer-based systems that facilitate the capture, storage, retrieval, display and analysis of the spatial data.

Management Strategy

How do we define the management strategy? The most common definition of management strategy can be: “Management strategy is a future oriented conception in which the relationship between the industry and the environment is described and it forms the guiding principles for the people in the industry for decision making.” It is obvious that the state of affairs with regard to the management strategy like the number of years for which the strategy has been planned, how minutely it has been described and for what level of people it forms the guiding principles etc., varies from industry to industry. However, it plays a fixed role towards the behaviour of each industry.

The problem of management strategy cannot be divided into formulation of strategy and the implementation of strategy. In the present day industry, particularly in the large industry, the formulation of strategy is no more the job of the strategy making staff only. As the diversification of jobs progresses and the operations also becomes more complicated. It can be considered that the formulation of strategy takes birth from the cooperative and joint working of all the members which constitute the organization in the industry.

The concept of management strategy The concept of management strategy is being used at least with two meanings. One is the strategy which results from the concrete behaviour. It points out to the chain of behaviours which are actually implemented. The people outside the organization can normally understand the strategy of this type. Another type of strategy is the conception for the future. This concern the broader plan related to the future of the industry as well as its operations.These two types of strategies may not necessarily always match. However, it is also true that the two types of strategies are mutually linked to each other. There is always some sort of conception in the background of any behavioural action. Further, various unforeseen matters and the new ideas also come into existence in natural manner and are linked to the behavoiur.The worthiness of management strategy is ultimately evaluated on the basis of result of a chain of actions. Therefore, it may, probably not be proper to evaluate the conceptual strategy on the face of it alone. However, the conceptual strategy plays a very important role in the organization. The concept provides a chance to guide the behaviour. Because of the existence of the concept, the behaviours change or new behaviours come into existence. Further, when all the people in an organization believe in the common concept, the behaviour as decided by different departments and the behaviour as decided at the time of any difference of opinion has a multiplying effect. In fact, it may be appreciated that the conceptual strategy is basically responsible for introducing, coordinating and synchronising the behaviour in the organization. The term management strategy can refer to the conceptual strategy.

In today’s society, various organisations like industry, hospitals and Government offices etc. are performing the activities with specific purposes. One has to adapt to the surrounding environment for the continuous sustenance of the organisational set up. However, the change in the present day social environment is very severe and is full of uncertainly.The long existence of the organisation itself as well as their further expansion cannot be accomplished just through the daily routine type decision making. In fact, it has become important to detect the opportunities and the threats from the changes and develop the capability to handle these opportunities and threats. Management strategy forms the key for such capabilities.Management strategy is applicable not only to the industry. It has become equally important for the Government offices, hospitals and schools. However, most of the study which has been carried out with regard to the management strategy deals with analysis of industry. Industry has to face very severe competition on day-to-day basis and the standards regarding the evaluation of its results are also very clearly defined.

Contents of Management Strategy The management strategy deals with relationship between industry and the environment. What types of decisions are required to decide this relationship? It is necessary to decide regarding the 4 areas mentioned below in order to determine the management strategy: [1] Definition of Domain[2] Operation Portfolio [3] Resource Development[4] Competitive Strategy

Definition of the Domain : First of all it is very important to decide what importance the future operations of an enterprise in order to decide the relationship between industry and environment. This also amount to drawing the long term composition of how the industry shall adapt itself to the environment. This is the definition of domain. Zone of survival as the definition of domain is the base for deciding the other definitions.It is said that the failure of Railways Industry in America was because of mistaken definition of domain. The American Railways Industry can be called as pilot representative of large industry. However, the Railway Industry thought that its work is only that of the railway operation rather that the transportation works. As a result, it failed to match the rapidly increasingly demand from the transportation sector.

Domain specifies the work area in which the operational activities of an enterprise are carried out or it is expressed as a concept covering all such operations. On the other hand, the definition of domain for the American industry relatively market oriented and it includes many elements which are close to the successful factors in the market. “IBM means Services” can be called as domain of IBM (the IBM operation is not to sell the machines but to sell the functions of the products).

Operation Portfolio : The operation portfolio is a table of operations or the overall structure while carrying out the operational activity in the industry. Normally, it is necessary to decide about the following two selections to determine the operation portfolio.[1] Which fields are to be included in the portfolio (deciding the composition of the portfolio).[2] How to handle the patterns given by the multiple numbers of operations (deciding the structure of portfolio).While deciding the operation portfolio, the attention of individual operation fields are important, but it is more important to consider how much total effect can generated through all the combinations of various operations.

Resource Development : Once the operation fields, which constitute the domain, have been decided, next it becomes important to decide about the necessary accumulation and distribution of resources required to meet the composition in each field. This composition is the resource development strategy.The management resource can be divided into substantive resources (human beings, articles, money) and the informative resources (technology, know-how, and brand image). In the case of substantive resources, it is the distribution which is more important than the accumulation of resources. A proper distribution matching the discriminate preferential order for every operational field is the key factor. On the other hand, it is the accumulation rather than the distribution which is more important in the case of information resources and its key factor is the organizational learning.

Competitive Strategy : Competitive strategy is the decision for establishing the competitive preferential order in each operational field. The basic topics in this connection are to understand the actual state of competition in the industry and market segment and the segment position of one’s own company as well as to come into competitive preferential order through the combination of management resources through this understanding. The competitive strategy is basically of three types, viz. cost leadership, discrimination and concentration.The above discussed four aspects are closely related to each other. Therefore, the coordination of four decisions becomes an important topic management strategy.

SWOT Analysis

The SWOT Analysis is one of several strategic planning tools that are utilized by businesses and other organizations to ensure that there is a clear objective defined for the project or venture, and that all factors related to the effort, both positive and negative, are identified and addressed. In order to accomplish this task, the process of SWOT involves four areas of consideration: strengths, weaknesses, opportunities, and threats. It should be noted that when identifying and classifying relevant factors, the focus is not just on internal matters, but also external components that could impact the success of the project.

A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic planning technique that incorporates an objective-driven SWOT analysis is Strategic Creative Analysis (SCAN). Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research.

} Strengths: attributes of the person or company those are helpful to achieving the objective. } Weaknesses: attributes of the person or company those are harmful to achieving the objective. } Opportunities: external conditions those are helpful to achieving the objective. } Threats: external conditions which could do damage to the business's performance.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.

If, on the other hand, the objective seems attainable, the SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering each of the following four questions, many times:

} How can we Use and Capitalize on each Strength? } How can we Improve each Weakness? } How can we Exploit and Benefit from each Opportunity? } How can we Mitigate each Threat?

Ideally a cross-functional team or a task force that represents a broad range of perspectives should carry out the SWOT analysis.

Travel brochure

By designing and creating a unique travel publication like brochure or guide book by any reputed graphic design agency based in the UK, the USA or India you can advertise your services and reach out to your clients in a more positive way. A travel publication includes general information related to the selected destination along with useful information about places to stay, prices, places to visit with plenty of appealing images. The first impression is usually the most lasting impression. And if your travel brochure makes a mark at the first glance, you stand a good chance of converting your visitor into your customer.

Guide Book: A guide book is a book for tourists or travelers that provide details about a geographic location, tourist destination, or itinerary. It is the written equivalent of a tour guide. It will usually include details, such as phone numbers, addresses, prices, and reviews of hotels and other lodgings, restaurants, and activities. Maps of varying detail are often included. Sometimes historical and cultural information is also provided. Different guide books may focus on different aspects of travel, from adventure travel to relaxation, or be aimed at travellers with larger or smaller travel budgets, or focus on the particular interests and concerns of certain groups, such as lesbian and gay singles or couples. Guide books are generally intended to be used in conjunction with actual travel, although simply enjoying a guide book with no intention of visiting may be referred to as "armchair tourism".

Brochure: A brochure or pamphlet is a leaflet advertisement. Brochures may advertise locations, events, hotels, products, services, etc. They are usually succinct in language and eye-catching in design. Direct mail and trade shows are common ways to distribute brochures to introduce a product or service. In hotels and other places that tourists frequent, brochure racks or stands may suggest visits to amusement parks and other points of interest. The two most common brochure styles are single sheet and booklet forms.

Features of Travel Brochures: The brochure plays a crucial role in attracting new customers, maintaining current ones and helping a business grow. Printed material represents the professional image of your company and relays a message that motivates a potential client to contact the business for more information. Most tourism related businesses are interested in having travel brochures to attract more customers. A well planned, well designed travel brochure can increase clientele. Travel brochures are an effective way to reach a target audience, so it is vital that the travel brochure is carefully designed and printed. A poorly designed travel brochure can drive away potential clients. Travel brochures are important because they help travelers locate and book exciting and exotic vacations. They provide travelers with the names and information on hotels, guesthouses and private rentals that make memorable vacation experiences. A well designed travel brochure will “sell” potential visitors their ideal vacation by highlighting a country’s best features. Such features include climate, recreational facilities, shopping, landmarks, historical features and distinct geographical locations. By using brief, descriptive summaries and pictures, ideal travel brochure can be designed. Some of the important features in a travel brochure are:

History: The area’s first known inhabitants, explorations and invasions, when the area was settled, achieved independence, the influence of wars, and cultural information are included under this heading.

Physical features: The main regions, major features, description of cities, any mountains or bodies of water.

Political features: Population density per square mile, the capital city and a list of the largest cities and their respective populations are main political features. Include the flag of the country, its coat of arms, the currency used and a list of the basic monetary units. The ancestry and ethnic diversity of the country are good points to include.

Language(s): Include the national language, other languages widely spoken, local dialects and a few helpful phrases.

Travel and Communication: Popular modes of transportation, the names of well known roads and highways should be listed. Popular radio and television stations can be listed along with a listing of popular shows.

Accommodations: Describe the types of accommodations available in the area. Include international chains, local favorites, discount hotels, private rentals, guesthouses, bed and breakfasts and hostels.

Culture: Culture is one of the most important aspects of a location and is widely overlooked. The area’s architecture, visual and performing arts, general information about religions, traditional clothing and what to wear when visiting certain areas are all very important facts to include in a brochure.

Recreation List: Popular sports and pastimes enjoyed in the area. Include all public and private recreational and entertainment facilities. Mention historical sites, sporting events, plays, festivals, parades and other celebrations.

Food List: the typical foods and beverages available, as well as the local delicacies and traditional foods. Be sure to include a section on where to find international and continental cuisine as well as chain restaurants.

Places of interest: It is important to mention major tourist attractions and places of interest. Include anything from museums to mountains in a collection of well known places worth visiting, and some little known places of interest.

Climate: The climate includes the high and low temperatures, average annual rainfall and the best and worst time to visit for particular weather.

Classification of markets

A market is a place where buyers and sellers interact. A market is simply a combination of buyers and sellers. These two groups can meet in a physical place (a shop, for example) or can meet across miles, aided by telecommunications (increasingly, the internet). They meet to buy and sell goods or services. The term “Market” is simply a short hand for “any place or situation where two or more people meet to exchange goods or services”. Basically there are four types of markets whose classification is based on the use of the products that these markets offer, the different types of which are listed and explained below:

(1) Consumer markets (2) Business-to-business markets (3) Institutional markets (4) Reseller markets

Consumer markets are those markets where general consumers buy products and services for personal or household use. For example pens, jeans, jewellery, pizza etc. As for business-to-business markets, these markets sell products and services to businesses for running their operations. For instance, office supplies or furniture for office use etc. The third type that is the institutional market includes a wide array of profit and non-profit organizations – these institutional markets provide goods and services for the benefit of the society. Such as markets offering medicines for hospitals or computers for universities could be classified as institutional market. The last type of market is the reseller market that is also called an intermediary. These markets consist of the members of the channels of distribution such as wholesalers, retailers, dealers etc, which are mutually called resellers and operate the reselling markets. Market has been classified on the basis of differences among them.

Markets on the basis of area covered are classified into:

(a) Local markets: The local market is a place for the purchase and sale of different goods within the city. The buyers and sellers of one city assemble to buy and sell. (b) Regional markets: It consists of many cities and districts of a particular area. The buyers and sellers of different villages, cities and districts assemble to buy and sell the different commodities. (c) National markets: It consists of the whole area of country. The buyers and sellers from all over the country take part in buying and selling.d) International markets: It consists of the whole world. The buyers and sellers from the whole world meet and exchange their foods and services. The commodities can be bought and sold at different places in the world.

Keeping in mind the positions of sellers in the market, the markets are categorized as:

(1) Primary market: It is the market where in the farm products are sold by the primary producers to the wholesalers or their agents. (2) Secondary market: It is the market where wholesalers sell goods to the retailers for further selling it to the consumers. (3) Terminal market: It is the market where the purchase is finalized by the consumers from the retailers.

On the basis of volume of business transacted, the markets are classified into:

(1) Wholesale market: As the name indicates it is the market wherein the goods are sold in bulk to the dealers. (2) Retail market: In case of retail market, the goods are sold in a small quantity directly to the consumers.

On the basis of nature of transactions, the market is classified as:

(1) Spot market: The spot market is the cash market. (2) Future market: In this market the purchase or sale of the commodity calls for delivery some months in the future. Actual delivery of goods is rarely made.

Marketing of a Hotel

How is a Hotel marketed?

Hotel is one of the major components of tourism industry. Hotel could be marketed properly within tourists. Apart from that a hotel could be marketed to different cooperates or MNCs. Nowadays the technological development and different types of marketing strategies find out a wide market for the hotel industry. 75% of all the hotel rooms sold all over the world comes from tourism industry directly. Travel agents, tour operators etc are the main sellers of the hotel rooms. Along with that comes the walk in customers. Marketing is the key function of hotel business. It is proved that the profit entirely depends on the systematic and proper marketing. When a hotel can understand the customers need properly then only a hotel can make a successful business. Hotel marketing could be divided in 4 categories – 1) research and analysis 2) developing and fulfillment of customer need 3) advertisement and promotion and 4) monitoring and corrective measures. To imply these steps a hotel needs trained executives. They keep regular touch with the travel agents, tour operators, corporate houses, airlines, Govt. offices, clubs etc to sale their product. For promotion and advertisements hotel mainly depends with the print media and hoardings.

MARKET SEGMENTATION

Recreation and tourism businesses and communities often make the mistake of attempting to be all things to all people. It is difficult, and risky, to develop marketing strategies for the mass market. Strategies designed for the "average" customer often result in unappealing products, prices, and promotional messages. For example, it would be difficult to develop a campground that would be equally attractive to recreational vehicle campers and backpackers or promote a property to serve both snowmobilers and nature oriented cross country skiers. Marketing is strongly based on market segmentation and target marketing.Market segmentation is the process of: (1) taking existing and/or potential customers/visitors (market) and categorizing them into groups with similar preferences referred to as "market segments;"

(2) selecting the most promising segments as "target markets;" and

(3) designing "marketing mixes," or strategies (combination of the 4 Ps), which satisfy the special needs, desires and behavior of the target markets.

There is no unique or best way to segment markets, but ways in which customers can be grouped are:

(1) location of residence---instate, out-of-state, local;

(2) demographics---age, income, family status, education;

(3) equipment ownership/use---RV's, sailboats, canoes, tents, snowmobiles;

(4) important product attributes---price, quality, quantity; and

(5) lifestyle attributes---activities, interests, opinions. To be useful, the segment identification process should result in segments that suggest marketing efforts that will be effective in attracting them and at least one segment large enough to justify specialized marketing efforts.

After segments have been identified, the business or community must select the "target markets," those segments which offer them the greatest opportunity. When determining target markets, consideration should be given to:

(1) existing and future sales potential of each segment;

(2) the amount and strength of competition for each segment;

(3) the ability to offer a marketing mix which will be successful in attracting each segment;

(4) the cost of servicing each segment; and

(5) each segment's contribution to accomplishing overall business/community objectives.

It is often wiser to target smaller segments that are presently not being served, or served inadequately, than to go after larger segments for which there is a great deal of competition.

MARKETING OBJECTIVES FOR EACH SEGMENT

Marketing objectives which contribute to the accomplishment of the overall business objectives should be established for each target market. Objectives serve a number of functions including:

(1) guidance for developing marketing mixes for different target markets;

(2) information for allocating the marketing budget between target markets;

(3) a basis for objectively evaluating the effectiveness of the marketing mixes (setting standards); and

(4) a framework for integrating the different marketing mixes into the overall marketing plan.

The target market objectives should:

(1) be expressed in quantitative terms;

(2) be measurable;

(3) specify the target market; and

(4) indicate the time period in which the objective is to be accomplished.

Market Research

Market research is the process of systematically gathering, recording and analyzing data and information about customers, competitors and the market. Its uses include helping create a business plan, launch a new product or service, fine tune existing products and services, and expand into new markets. Market research can be used to determine which portion of the population will purchase a product/service, based on variables like age, gender, location and income level. Market research is generally either primary or secondary. In secondary research, the company uses information compiled from other sources that appears applicable to a new or existing product. The advantages of secondary research are that it is relatively cheap and easily accessible. Disadvantages of secondary research are that it is often not specific to your area of research and the data used can be biased and is difficult to validate. Primary market research involves testing such as focus groups, surveys, field tests, interviews or observation, conducted or tailored specifically to that product. A list of questions that can be answered through market research: 1> What is happening in the market? What are the trends? Who are the competitors? 2> How do consumers talk about the products in the market? 3> Which needs are important? Are the needs being met by current products?

Subjects of market research;- 1. Identification of customers. 2. Competition on the market. 3. Size of the market. 4. demand and supply in the market 5. acceptable price level 6. past and present trends in the market 7. number of potential buyers

Market research can be made on a fixed subject or it can be done on all the subjects together. Because of the growing competition in the market now MR become necessary for the entire business firm. An organization make their future plans on the base of MR. Whenever any Organization want to go for market research they have to collect data about the above mentioned subjects. In case of service market like tourism market the organization need to collect data also on the following subjects:- 1. Types of tourists 2. types of transportation 3. stay length at the destination 4. expense capacity of the tourists 5. types of accommodation 6. FOREX facilities 7. security and safety at the destination 8. telecommunication 9. rules and regulations 10. food & beverages

Concept of Tourism Marketing

Marketing Concept Marketing is a human activity directed at satisfying needs and wants through exchange process. According to the British Institute of Management “Marketing is the management function which organizes and directs all those business activities involve in assessing and converting customers purchasing power into effective demand for a specific product or service and in moving the product or service to the final customer or user so as to achieve the profit target or other objectives set by the company.” Marketing are based on two principles: 1} fulfilling the community’s needs for goods and services, determining the consumer’s needs and meeting them. 2} the company must make a reasonable profit while satisfying the needs of the customer. There are three important aspects of marketing concept. 1) Customer Orientation: - this concept indicates mainly to more customers’ participation and profit making. 2) Dual-core Marketing: - this concept indicates that the first job of marketing is to identify the need of the buyer and then increase those wants through different type of promotion. 3) Integrated Marketing: - not only consumer orientation in enough but the company need to develop their infrastructure to provide best of the services. Facilities of marketing concepts:- It can give a proper view of the market. Then it will be easier to divide the market in different segments which will allow setting best promotional activity. It can help to identify the potential buyer. It can show the way to more profit through customer orientation. It also helps to identify the way to develop the quality of products or services. Marketing Process Market analysis Market research Market segmentation Product formulation Pricing Place of distribution Promotional activity the 5th ‘P’ – People, Process and Physical Factors

Nature of Service Marketing...

The nature of services marketing So far, much of what has been said could be equally applicable to either a product or a service. So, is there anything special about services marketing? At one level, the theory of marketing has universal application – the same underlying concerns and principles apply whatever the nature of the business. However, the nature of a particular service business may dictate a need to place much greater emphasis on certain marketing elements, which in turn could lead to different marketing approaches. It is frequently argued that services have unique characteristics that differentiate them from goods or manufactured products. The four most commonly ascribed to services are: Intangibility – services are to a large extent abstract and intangible. Heterogeneity – services are non-standard and highly variable. Inseparability – services are typically produced and consumed at the same time, with customer participation in the process. Perishability – it is not possible to store services in inventory. However, the huge diversity of types of service businesses suggests that it is difficult to fit services into a neat definition. It is clear, for example, that not all services possess all of the above characteristics and that some even possess the opposite (tangibility, homogeneity, separability and durability) Services possess other special qualities of importance to marketers. Services offer significant opportunity for resource sharing, such as through line-rental or timeshare agreements, where personalized access to telecommunications or a holiday home is kept at an affordable level by sharing access to goods, physical facilities, systems and expertise. The duration of usage, or time element, extends the perspective for pricing strategy beyond relative quality and value. Thus, while activity-based costing is widely used in manufacturing, time-based pricing may be a desirable option in the provision of services. Further scope for competitive differentiation may exist where price-sensitive customers can take advantage of lower cost timeperiods and time-sensitive customers are willing to pay extra for speed or last-minute convenience. Arguably, marketing’s traditional emphasis on the provision of goods as the basis for economic exchange is being replaced by an emphasis on the provision of services – elevating the importance of marketing planning for service businesses. The nature of services marketing There is an increasing trend towards differentiating what were once considered to be tangible products by exploiting the intangible service elements of the offer. The service elements can be added to provide unique features matching customer needs. For example, in the highly competitive photocopier business, service has become a major factor in the buying decision. Photocopiers are leased or sold with service contracts which tie customers to the supplier. Nevertheless, it will be difficult to proceed without attempting to define a service in some way. Therefore, while recognizing that any definition might prove to be unduly restrictive, and that somewhere a service may exist which does not conform to what we say, the definition is: A service is an activity which has some element of intangibility associated with it. It involves some interaction with customers or property in their possession, and does not result in a transfer of ownership. A change of condition may occur and provision of the service may or may not be closely associated with a physical product. Classification of services There have been a number of approaches used to develop a classification scheme for services. The intention behind this work was to provide service managers with a means of identifying other companies who, though operating in different types of industries, shared certain common characteristics. Some of these early approaches were not always helpful in aiding the development of service marketing strategies. In some cases, the fault lay in the oversimplification of the classification scheme used, which did not offer enough strategic marketing insights to be of much value. In other cases, service managers were not open-minded enough to recognize where similarities with other industries could exist.