Role of Government


In general, government has three basic economic functions. First, government provides a legal foundation and an appropriate social environment for the conduct of economic activity. Second, government both encourages competition in the marketplace and controls it. This is accomplished through legislation and government agency rules and regulations. Finally, government redistributes income from some segments o the economy to others. Government acquires revenues through taxation—taxes on income, property, sales, and payroll. These revenues are channeled back into the economy through spending and transfer payments to veterans, the aged, welfare recipients, and others in society. In short, government is a consumer of goods and services and not producer of them.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

New Product Concept


Webster’s says a concept is an idea or an abstract notion. Businesspeople use the term concept for the product promise, the customer proposition, and the real reason why people should buy. It is a stated relationship between product features (form of technology) and consumer benefits—a claim of proposed satisfactions. This promise is open to four interpretations:

  • The producer’s perception of the features of the new product.
  • The consumer’s perception of the features of the new product.
  • The producer’s estimate of the benefits delivered by that set of features.
  • The consumer’s estimate of the benefits delivered by that set of features.

These are only forecasts, guesses, at this time—not reality, even with a prototype in hand. They rest on expectations.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Simultaneous Production and Consumption


Whereas most goods are produced first, then sold and consumed, most services are sold first and then produced and consumed simultaneously. A restaurant services cannot be provided until they have been sold, and the dining experience is essentially produced and consumed at the same time. Frequently this also means that the customer is present while the service is being produced and thus views and may even take part in the production process. This also means that frequently customers will interact with each other during the service production process and thus may affect each others’ experiences. For example, strangers seated next to each other in an airplane may well affect the nature of the service experience for each other. That passengers understand this fact is clearly apparent in the way business travelers will often go to great lengths to be sure they are not seated next to families with small children. Another outcome of simultaneous production and consumption is that service producers find themselves playing a role as part of the product itself and as an essential ingredient in the service experience for the consumer.

Because services often are produced and consumed at the same time, mass production is difficult if not possible. The quality of service and customer satisfaction will be highly dependent on what happens in “real time,” including actions of employees and the interactions between employees and customers. Similarly, it is not usually possible to gain significant economies of scale through centralization. Usually operations need to be relatively decentralized so that the service can be delivered to the consumer in convenient locations. Also because of simultaneous production and consumption, the customer is involved in and observes the production process and thus may affect (positively or negatively) the outcome of the service transaction.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Defining Oligopoly


An oligopoly is a form of competition in which a market is dominated by just a few sellers. Generally, oligopolies exist in industries that produce products such as steel, cereal, automobiles, aluminum, and aircraft. One reason some industries remain in the hands of a few sellers is that the initial investment to enter an oligopolistic industry is usually tremendous. Think what it would cost to build a steel mill or an automobile assembly plant. In an oligopoly, prices tend to be close to the same. Note, for example, how most credit cards charge very similar rates. The reason for this is simple. Intense price competition would lower profits for all the competitors, since a price cut on the part of one producer would most likely be matched by others. Product differentiation, rather than price differentiation, is usually the major factor in market success in a situation of oligopoly.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Micro-Macro Dilemma


Producers and consumers making free choices can cause conflicts and difficulties. This is called the micro-macro dilemma: what is good for some producers and consumers may not be good for society as a whole.

Each year thousands of people are killed with handguns. Yet there are producers who make and sell handguns at a profit. And there are many consumers who feel strongly about their right to own guns. But others argue that handguns are a threat to society. They want handgun sales banned sale of all weapons limited. Should gun producers be allowed to sell guns to consumers who want them?

Such decisions don’t have to involve a matter of life and death to be important. People want the convenience of disposable products and products in easy-to-use, small-serving packages. But these same “convenient” products and packages often lead to pollution of the environment and inefficient use of natural resources. Should future generations be left to pay the consequences of pollution that is the result of “free choice” by today’s consumers?

Questions like these are not easy to answer. The basic reason is  that many different people may “have a stake” in the outcomes—and social consequences—of the choices made by individual managers and consumers in a market-directed system.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Macro-marketing


Macro-marketing is a social process that directs an economy’s flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.

Macro-marketing is concerned with the flow of need-satisfying goods and services from producer to consumer. However, the emphasis is on how the whole marketing system works. This includes looking at how marketing affects society, and vice versa.

Every society needs a macro-marketing system to help match supply and demand. Different producers in a society have different objectives, resources, and skills. Likewise, not all consumers share the same needs, preferences, and wealth. Within every society there are both heterogeneous supply capabilities and heterogeneous demands for goods and services. The role of macro-marketing system is to effectively match this heterogeneous supply and demand and at the same time accomplish society’s objectives.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Factors that Affect Price


The price of everything—from bubble gum to space shuttle—is determined by some combination of demand and supply as analyzed by managers. Demand factors are the things that determine the strength of the consumers’ desire and ability to pay for goods and services. Supply factors are the things that determine the amount of goods and services producers place on the market. Figured in supply are the costs of producing and marketing a product and the number of competing procedures. So when pricing, managers must consider (1) demand, (2) production and marketing costs, and (3) competition.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Pure Competition


The term competition is used ambiguously not only in ordinary conversation but in economic literature as well. Its common meaning is rivalry, but in economics when used along with the word pure, it carries a different meaning. Following are necessary conditions for pure competition:

  1. Homogeneity of the product: For competition to exist in a market all sellers of the product being exchanged sell homogeneous units of the product, or at least the buyers of that product believe that this is so.
  2. Smallness of each buyer or seller relative to the market: Each buyer and each seller of the product under consideration is too small in relation to the entire market for the product to influence significantly the price of the product that is being bought or sold.
  3. Absence of artificial restraints: There are no artificial restrictions on the demands for, the supplies of, and the prices of whatever is being exchanged. No government price fixing nor any institutional fixing or administering of price by producers’ associations, labor unions, or other private agencies. There is no supply restriction enforced by the government or by organized producer groups. Control of demand through governmental rationing is nonexistent.
  4. Mobility: There is mobility of goods and services of resources in the economy. New firms are free to enter any desired industry, and resources are free to move among alternative uses to those where they desire employment. Sellers are able to dispose of their goods and services where the price is highest. Resources are able to secure employment in their highest paid uses.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Efficiency vs. Effectiveness


It is said that the difference between efficiency and effectiveness is the difference between’ doing things right’ and ‘doing right things.’ It should encompass both efficiency and effectiveness. That is ‘doing right things right.’

Imagine that you visit your friend. As you are chatting, your friend asks his wife to bring coffee. A little later a tray with milk, sugar, coffee powder and cup is placed before you to prepare coffee of your taste, light or strong, with or without sugar, etc. and you prepare coffee and drink it.

On some other occasion, you visit another friend. As you are chatting, your friend’s wife brings coffee in a cup (before being asked by your friend). Coffee is already prepared. As you take the first sip, she enquires if the sugar is enough. As you say, ‘its ok’ and drink coffee, she stands there. After you finish, she takes the cup and goes off.

In these two cases of serving coffee, it could be seen, that the purpose was served. In the first case it was done in a ‘5-star’ style. No one can find fault with it. But in the second case, there is an additional component attached to it, namely the personal touch. This definitely had its role in creating an ‘impact.’

The first can be said to be an efficient way of serving coffee and the second an effective way. Efficiency is all about how the ‘producer’ has felt and effectiveness is all about how the ‘user’ has felt.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Product Development Process


The product development process involves analysis of the marketplace, the buyer, the company’s capabilities, and the economic potential of new product ideas. This process may be both expensive and time consuming. To accelerate the process, many companies create multidisciplinary teams so that manufacturing and marketing plans can be developed in tandem while the product is being designed.

  1. Generation and Screening of Ideas: The first step is to come up with ideas that will satisfy unmet needs. A producer may get new product ideas from its own employees or from external consultants, it may simply adapt a competitor’s idea, or it may buy the rights to someone else’s invention. Customers are often the best source of new product ideas.
  2. Business Analysis: A product idea that survives the screening stage is subjected to a business analysis. At this point the question is: Can the company make enough money on the product to justify the investment? To answer this question, companies forecast the probable sales of the product, assuming various pricing strategies. In addition, they estimate the costs associated with various levels of production. Given these projections, the company calculates the potential cash flow and return on investment that will be achieved if the product is introduced.
  3. Prototype Development: The next step is generally to create and test a few samples, or prototypes, of the product, including its packaging. During this stage, the various elements of the marketing mix are put together. In addition, the company evaluates the feasibility of large-scale production and specifies the resources required to bring the product to market.
  4. Product Testing: During the product testing stage, a small group of consumers actually use the product, often in comparison tests with existing products. If the results are good, the next step is test marketing, introducing the product in selected areas of the country and monitoring consumer reactions. Test marketing makes the most sense in cases where the cost of marketing a product far exceeds the cost of developing it.
  5. Commercialization: The final stage of development is commercialization, the large-scale production and distribution of those products that have survived the testing process. This phase requires the coordination of many activities—manufacturing, packaging, distribution, pricing and promotion. A classic mistake is letting marketing get out of phase with production so that the consumer is primed to buy the product before the company can supply it in adequate quantity. A mistake of this sort can be costly, because competitors may be able to jump in quickly. Many companies roll out their new products generally, going from one geographic area to the next. This enables them to spread the costs of launching the product over a longer period and to refine their strategy as the rollout proceeds.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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