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February 25, 2012
Principles of Economics & Bangladesh Economy
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Principles of Economics & Bangladesh Economy-JAIBB
Q.5 What is a Demand Curve? Ans.: Meaning : Demand Curve is simply a graphic representation of demand schedule. It expresses the Read More >>> Email ThisBlogThis!Share to TwitterShare to Facebook Labels: 1.1 Principles of Economics and Bangladesh Economy
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Principles of Economics & Bangladesh Economy-JAIBB
Theory of Demand Q.1. What is Demand? Ans.: Meaning : The demand for any commodity at a given price is the quantity of it which will be bought per unit of time at that price. Elements of Demand : According to the definition of demand here are three elements of demand for a commodity :(i) There should be a desire for a commodity. (ii) The consumer should have money to fulfill that desire. (iii) The consumer should be ready to spend money on that commodity. Thus we can define demand as the desire to buy a commodity which is backed by sufficient purchasing power and a willingness to spend. Q.2 What are the Determinants of Demand? Ans.: There are many economic, social and political factors which greatly influence the demand for a commodity. Some of these factors are discussed below : (1) Price of the Commodity (2) Price of Related Goods (i) Complementary Goods (ii) Substitute Goods (3) Level of Income and Wealth of the Consumer (i) Necessaries (ii) Inferior goods (iii) Luxuries (4) Tastes and Preference (5) Government Policy (6) Other Factors : (i) Size and Composition of Population (ii) Distribution of Income and Wealth (iii) Economic Fluctuations Q.3 What is the Law of Demand? Ans.: The law of demand states that, other things being equal, the demand for a good increases with a decrease in price and decreases in demand with a increase in price. The term other things being equal implies the prices of related goods, income of the consumers, their tastes and preferences etc. remain constant. Q.4 What is a Demand Schedule? Ans.: Meaning : A Demand schedule is a list of the different quantities of a commodity which consumes purchase at different period of time. It expresses the relation between different quantities of the commodity demanded at different prices. (i) Individual Demand Schedule : It is defined as the different quantities of a given commodity which a consumer will buy at all possible prices:(ii) Market Demand Schedule: Market demand schedule is defined as the quantities of a given commodity which all consumer will buy at all possible prices at a given moment of time:Email ThisBlogThis!Share to TwitterShare to Facebook Labels: 1.1 Principles of Economics and Bangladesh Economy February 24, 2012

Principles of Economics & Bangladesh Economy-JAIBB Q.1 Give an appropriate definition of Economics.
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB)
Ans.: The term economics is derived from two Greek words OIKOS and NEMEIN meaning the role or law of the household.Economics is the study of now people and society, choose to employ scarce resources with or without the use of money, that could have alternative ;uses in order to productive ;various commodities and to distribute them for consumption, now or in the future among various persons and groups in society. Q.2 How Economics is a Science and Arts? Ans.: The term science has been defined as the systematized body of knowledge, which traces the relationship between cause & effect. Applying this definition to economics we find that economics is that branch of knowledge where the various facts relevant to it have been systematically collected,
classified and analyzed. An arts is a system of rules for the attainment of a given end. An art isapplication of knowledge and practical application. Economic has all these feature of being an art. Q.3 How Economics is as a Normative and Positive Science? Ans.: It deals with thing as they ought to be. It has no objection to discussion the moral rightness or wrongness of things. Economics is not only explaining facts as they are but also justifies them. Positive Science deals with things as they are means What is. It explains their causes and effect but it remain strictly neutral as regards ends, it refuses to pass moral judgments. Both can be distinguish as follows : Basis 1.Expresses 2. Based on 3. Deal with 4. Value judgment Positive What is Cause & effect of facts Actual or realistic situation Are not given Normative What ought to be & Ethics Idealistic situation Are given
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BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Principles of Economics & Bangladesh Economy-JAIBB Q.5 What is a Demand Curve? Ans.: Meaning : Demand Curve is simply a graphic representation of demand schedule. It expresses the relationship between different quantities demanded at different possible prices of the given commodity. (i) Individual Demand Curve : The graphic representation of Individual Demand is known is Individual Demand Curve. Thus individual demand curve is the one that represent different quantities of a commodity demanded by a consumer at different prices. (ii) Market Demand Curve : The graphic representation of market demand schedule is known as Market Demand Curve. Thus market demand curve is the one that represents total quantities of a commodity demanded by all the consumers in the market at different prices. It is the horizontal summation of the individual demand curves. Fig.(i) shows As Demand Curve, fig.(ii) shows Bs Demand Curve and fig. (iii) shows the Market Demand Curve. Thus by adding the different points on individual demand curves one get the market Demand Curve. Q.6 Why do Demand Curve slopes downwards? Ans.: Reasons are :(i) Law of Diminishing Marginal Utility : The law of demand is based on the law of diminishing marginal utility which states that as the consumer purchases more and more units of a commodity, the satisfaction derived by him from each successive unit goes on decreasing. Hence at a lesser price, he would purchase more. Being a rational human beings the consumer always tries to maximize his satisfaction and does so equalizing the marginal utility of a commodity with its price i.e. Mux = px. It means that now the consumer will buy additional units only when the price falls. (ii) New Consumers : When the price of a commodity falls many consumers who could not begin to purchase the commodity e.g. suppose when price of a certain good x was Tk. 50 market demand was 60 units now when the price falls to Tk. 40, new consumers enter the market and the overall market demand rises to 80 units. (iii) Several Use of Commodity : There are many commodities which can be put to several uses e.g. coal, electricity etc. When the prices of such commodities go up, they will be used for important purpose only and their demand will be limited. On the other hand, when their price fall they are used for varied purpose and as a result their demand extends. Such inverse relation between demand and price makes the demand curve slope downwards. (iv) Income Effect : When price of a commodity changes, the real income of a consumer also undergoes a changes. Hence real income means the consumers purchasing power. As the price of a commodity falls the real income of a consumer goes up and he purchases more units of a commodity eg. Suppose a consumer buys units wheat at a price Tk. 40/kg now, when the price falls to Tk. 30/kg. his purchasing power or the real income increase which induces him to buy more units of wheat. (v) Substitution Effect : As the price of a commodity falls the consumer wants to substitute this good for those good which now have become relatively expensive e.g. among the two substitute goods tea and coffee, price of tea falls then consumer substitutes tea for coffee. This is caused the Substitution effect which makes the demand curve sloped downwards. In a nutshell, with a fall in price more units are demanded partly due to income effect and partly due to substitution effect. Both of these are jointly known as the price effect. Due to this negative price effect the demand curve slopes downwards. Q.7 What are the exceptions to the Law of Demand? Ans.: Exceptions to the law of demand refers to such cases where the law of demand does not operate, i.e., a positive relationship is established between price and quantity demanded.
(i) Giffen Goods : Sir Giffen made an interesting observation in 1845 during famine in Ireland. When price of potatoes went up, poor people purchased more quantity of potatoes instead of less quantity as expected from the law of demand. The reason was that between two items of food consumption meat and potatoes- potatoes were still cheaper, with the result that the poor families purchased more of potatoes and less of meat. This is known as Giffen effect which is seen in cheap necessary foodstuffs. Again, the word Giffen is not synonymous with inferior. It simply refers to those goods which have a positive relationship with price. (ii) Conspicuous Goods or Goods of Ostentation (iii) Conspicuous Necessities (iv) Future Expectations About Prices (v) Change in Fashion (vi) Ignorance (vii) Emergency Email ThisBlogThis!Share to TwitterShare to Facebook Labels: 1.1 Principles of Economics and Bangladesh Economy
April 10, 2012
Business Communications-Sample: Banking Letters-3

BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Business Communications-JAIBB Sample: Banking Letters-3
Write a letter informing a customer about the process of opening a fixed deposit account. (To Get Download Option Click Read More)
Agrani Bank
Nawabpur Branch 36 Nawabpur Road, Dhaka 1000 Tel: 957 3053 Fax: 957 3054 Email: abnp@agranibank.org
Our Ref: AG/Nawab/Dev/233/10 Sunday, May 23, 2010 Ms. Suraiya Begum 103 Dinanath Sen Road Gandaria Dhaka 1204 SUB: PROCESS OF OPENING A FIXED DEPOSIT ACCOUNT Dear Madam: Thank you for letter dated April 27, 2010 requesting us to let you know the process and formalities about opening Fixed Deposit Account with our branch. You would be glad to know that opening a fixed deposit account is very easy. What you need to do is visit our branch with your national ID card and cash on any day during office hours. We will take not more than 20 minutes to open your Fixed Deposit Account for any amount for any term. We are enclosing with this letter a brochure on different products of deposit along with rules and rates of interest. For fixed deposit we offer 9% interest for a period of six months, 10% for one year and 12% for more than one year.
Looking forward to serve you as your trusted bank. Thank you so much. Sincerely, Maswood Alam Khan Manager Enclosed: Deposit Brochure Banking Letters-3
April 2, 2012
Business Communications-Sample: Banking Letters-2
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Business Communications-JAIBB Sample: Banking Letters-2
Write a letter to the Legal Department in the Head Office of your bank; seeking advice on what action should you take on a loan defaulter. (To Get Download Option Click Read More)
Bangladesh Krishi Bank

Phone: 656 7389 Fax: 656 7390 Email: bkbagrabad@bkb.com Our Ref: legal/19/default/09 Thursday May 08, 2009
Agrabad Branch Chittagong P.O. Box No. 332
The Legal Advisor Bangladesh Krishi Bank Head Office, Motijheel Dhaka 1000 SUB: SEEKING LEGAL ADVICE REGARDING A LOAN DEFAULTER
Dear Sir, Chittagong Diary Products Ltd. is a valued party of our branch. They have been banking with us for the last 12 years. But, of late, the party is not responding to our repeated requests to pay their installments of a long-term loan. They have already failed to pay three installments and the loan has already been classified. According to our normal banking practice it is high time we instituted a case against them in the Ortho Rin Adalat. But, we are afraid, they will stop banking with us if we file a suit against them.
Can we take any legal measure that may motivate them to adjust the longdue loan? We have sent them our reminders through letters. But, no legal notice has yet been served to them. Awaiting your early response. Sincerely, Maswood Alam Khan Manager
Sample Banking Letters-2
February 25, 2012
Business Communications
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Business Communications-JAIBB 01. WHAT IS COMMUNICATION?Communication is the art of getting your message across effectively through: Spoken words (primary and simplest way) Written words (reflects importance) Body language (can make or mar) Visual images (leaves the greatest impact)
02. PURPOSE OF COMMUNICATION- to get work done from peers and subordinates - to improve the efficiency of our business transactions - to coordinate/interact better - to motivate and influence others - to send/receive information in an unambiguous manner - to save considerable time and effort - to take better decisions, both personal and professional - to develop better relationships, both at home and at work 03. WHAT IS BUSINESS COMMUNICATION? Business Communication is communication that occurs in an organizational context in order to: - exchange information, ideas, plans, strategies - offer the best of customer services - make decisions, rules, proposals, contracts, and agreements, etc. In fact, communication is regarded as the lifeblood of every organization. 04. METHODS OF BUSINESS COMMUNICATION (a) 1. Vertical communication (downward, upward) 2. Horizontal communication (lateral communication) (b) 1. One-to-one communication 2. One-to-many communication (c) 1. Formal communication 2. Informal communication (d) 1. Oral communication 2. Written communication (e) 1. Internal communication 2. External communication
07. BENEFITS OF EFFECTIVE COMMUNICATION You will: - be able to communicate clearly with clients and other professionals - possess superior presentation skills - develop and communicate objectives and strategies better - be able to write proposals and quotations clearly - develop good overall oral/written communication skills Email ThisBlogThis!Share to TwitterShare to Facebook Labels: 1.2 Business Communications February 21, 2012
Business Communication: (Sample) Banking Letters

BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Business Communications-JAIBB
Sample: Banking Letters
A customer has complained to the Bank that a cheque issued by him has been dishonored in spite of sufficient balance in his account. Draft a suitable reply in the light of the fact that the mistake was committed by one of the members on your staff.
AGRANI BANK Agrabad Branch Chittagong 18th May 200.. Mr. S. A. Karim 24 Mohan Nagar Chittagong Dear Sir, Re: Dishonour of Cheque No. 2133678 We have received your letter dated 14th May. We sincerely apologies for the wrongful dishonour of the cheque No. 2133678 for the Tk. 5000.00 and the inconvenience caused to you thereby. If you look into the eounterfoils of your cheque book, you will notice that you had issued a post-dated bearer cheque for Tk. 2500.00 in the name of Mr. Ghulam Mustafabefore issuing cheque No. 2133678. It was dated 15th, May but was presented at the counter and paid by over-sight, on 12 th May, reducing the balance in your account to Tk. 4000.00. Hence when the cheque for Tk. 5000 was presented to the Bank on 13 th May, it was returned with the reason insufficient funds marked on it.We realize that such a mistake should not have been committed. The staff member responsible for it has been cautioned an we assure you that such a mistake will not recur in future. We notice that some cheques deposited by you having een cleared in the meanwhile, there is sufficient balance in your account to cover TK. 5000.00. You may request Mr. Ghulm Mustafa to present the cheque again to us. We highly esteem your association with the Bank and assure you of our co-operation at all times. Yours faithfully, Mohammad Azeem Manager March 8, 2012
Contract Act 1872 -Laws and Practice of Banking-JAIBB

Laws and Practice of Banking-JAIBB Meaning and Essentials of Contract
Q.1. An agreement enforceable by law is a contract Comment and explain the essentials of a valid contract in brief. Ans.: Generally contract means a promise or agreement made by two or more persons enforceable by law. According to Indian Contract Act 1872 Section 2(h) defined. An agreement enforceable by law is a contract. Hence, agreement and legal enforceability creates an agreement as contract. Section 10 defines All Agreements are contracts if they are made by the free consent of parties, competent to contract for a lawful consideration and with a lawful object and are not hereby expressly declared void. The contract to be made in writing by law of land or in the presence of witnesses or be registered, if required On the basis of the above definitions and judgment given by judges, help us to mention the following essentials of a valid contract : (1) Atleast two parties are required to enter into a contract that is promisor and romisee. (2) Agreement : Proposal and acceptance must be absolute and unconditional.The two identical Cross-offers and successive counter offer are only offer and not agreement. (3) The intention should be to create legal relations not the social, domestic, political relations. (4) Contractual capacity among persons who is not minor, insane and disqualified by law of the land. (5) Consent or Consensus ad idem. The parties are said to consent when they agree upon the same thing in the same sense. (Section13). 6) Free Consent : According to Section14, the consent is said to be free when it is not caused by i) coercion, or ii) undue influence, or iii) fraud, or iv) misrepresentation or v) mistake. (7) Consideration : Except some exceptions, an agreement without consideration is void. It means quid pro-quo. It must be lawful and real and not illusory. (8) The lawful object and its consideration must be legal. (9) The agreement must have certain meaning. (10) An agreement to be valid must be possible to be performed. (11) The agreements must not be declared void by the law of the land.
(12) Compliance of legal formalities is required. Hence, every agreement to be enforceable by law must possess all these essential elements for a contract. If any of the element is missing in an agreement, such agreement is not enforceable by law.
Proposal and Acceptance

Q.1. Define offer and acceptance. Explain rules regarding valid acceptance. Ans.: The term offer is also called proposal. It is defined under Indian Contract Act,1872 Section 2(a), when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. Acceptance is defined under section 2(b) of Contract Act, 1872 i.e. when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Rules regarding Valid Acceptance : A few important rules of acceptance are as follows in brief : (1) Acceptance must be absolute and unqualified {Section 7(1)}. (2) It must be in prescribed manner/reasonable manner {Section 7(2)}. (3) Acceptance may be given by performance of condition or act required by an offeror {(Section8)}. (4) It may be given by acceptance of consideration (Section 8). (5) Acceptance may be express or implied. (6) It must be given within specified or reasonable period of time. (7) Acceptance must be given while the offer is in force. (8) It must be given only after the communication of offer is complete. (9) Acceptance must be given by the person to whom offer is made. (10) Acceptance must be communicated, only mental determination or intention to give acceptance is not sufficient. (11) It must be from competent person/authorized person otherwise it will not be binding. Powell V. Lee (1908) (12) It should be communicated to the offeror himself, other than him will not create legal obligation. (13) Acceptance subject to contract is no acceptance. It will not create legal binding. Note : (i) A rejected offer cannot be accepted. (ii) Counter offer does not constitute acceptance. (iii) Cross offer cannot be assumed as acceptance. (iv) Silence does not generally amount to acceptance. (v) Acceptance to offer means acceptance of all terms of offer. (vi) Sometimes grumbling acceptance is a valid acceptance. (vii) Enquiring/seeking clarification of offer is not to be assumed as acceptance. (viii) Circumstances of the acceptance must show the ability and willingness to fulfill the terms of offer.
Capacity to Contract
Q.1. Who can make a valid contract? Discuss the validity of agreements made by a minor. Ans.: According to Section 11, Every person is competent to contract who is of the age of majority according to law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject. Hence, the following persons can make valid contract :
(i) Who is major (ii) Who is of sound mind or sane (iii) Who is not disqualified from contracting by any law of the land to which he is subject. Validity of Agreement made by a Minor : (i) Agreements with or by a minor is absolutely void. Ruling was given in Mohri Bibee vs. Dharmodas Ghose. (ii) No ratification of minors contract. (iii) A minor can be a promisee or beneficiary. (iv) Restitution/compensation is possible in case of minor under (section 33, specific Relief Act, 1963). (v) The rule of estoppel does not apply for minor, he can plead his minority. (vi) No specific performance is possible in case of minor because contract made by him is void {(Mirsarawarjan vs. Fakhruddin 1912) 3 Col. 232)} (vii) Contract by parents/guardian/manager may be made on behalf of theminor, provided they had authority and benefit to minor (viii) Minor may be given share in existing partnership business by theconsensus of the partners. (ix) Minor may be appointed as Agent but principal will be personally liable for his acts. (x) Acts done by minor is parents will not be liable. (xi) Guarantee for and by the minor is valid. (xii) Insolvency Act does not apply on minor; hence, minor cannot be adjudicated insolvent. (xiii) Minor may be joint promisor under Law of contract. (xiv) Minor cannot apply for allotment of shares in company, but he can apply for fully paid up share on behalf of his guardian. (xv) Minor is allowed to make, draw and endorse negotiable instrument but he is not liable for dishonour. (xvi) Minor cannot enter into service agreement but he can be beneficiary if he has performed his promise. (xvii) Minor can enter into the contract of Apprenticeship at the age of 14 years if he is physically fit. (xviii) Minor can become trade union member if he has attained the age of 15 years. (xix) Marriage contract of minor on behalf of parents is allowed on the ground of the customs of the community. (xx) Minor is held responsible for torts or civil wrong committed by him (xxi) Liability of necessaries of life supplied to him or his legal dependents. His property is liable; he is personally not liable.
Free Consent
Q.1. Define Free consent? When does consent become free? Explain rules regarding free consent. Ans.: According to section 10 of the Indian Contract Act, 1872, All agreements are contract if they are made by the free consent of the parties competent to contract for a lawful consideration and lawful object and are not hereby expressly declared to be void. Therefore, free consent is the one of the essentials of valid contract. But free consent is composed of two words free + consent. The term free meant without any pressure. Consent means defined under Section 13. Two or more persons are said to consent when they agree upon the same thing in the same sense. Free consent is defined under section 14 i.e. consent is said to be free when issues not caused by : (1) Coercion, as defined in section 15, or (2) Undue influence, as defined in section 16, or (3) Fraud, as defined in section 17, or (4) Misrepresentation, as defined in section 18, or
(5) Mistake subject to the provision of section 20, 21 and 22. Therefore, consent is not free when it has been caused by coercion or undue influence or fraud or misrepresentation and mistake. But if the consent is caused by any one of the first four factors such as coercion, undue influence, fraud and misrepresentation. The agreement is a voidable at the option of the party whose consent was so caused. (Section 19 and 19A). Under such position, the aggrieved party has option to assume the agreement either valid or void. If the contract is caused by mistake of foreign law, the agreement is void under section 20 and 21. Hence, there are two situations i.e. no free consent that is earlier and no consent is as error in consensus. The rules regarding free consent are as follows one by one. Coercion : Coercion means and includes the use or threatening to use the physical force against a person or property to compel him to enter him into a contract. According to section 15 of the Indian contract Act, 1872. Coercion is the committing or threatening to commit any act forbidden by the Indian Penal Code or the lawful detaining or threatening to detain, any property, to the rejudice of any person whatever, with the intention of causing any person to enter into an agreement. It is immaterial whether IPC is or not enforced in the place where the coercion is employed (Section 15). Legal Rules relating to Coercion : (1) Committing any act forbidden by the IPC i.e. killing or beating another person and interfering in the personal freedom of another person etc. (2) Threatening to commit any act forbidden by the IPC. (3) Threats to suicide amounts to coercion. (4) Unlawful detaining of any property. (5) Unlawful threatening to detain any property (6) The act of coercion must have been performed with the intention of causing any person to enter into an agreement. (7) Coercion may proceed either from the party or from a stranger. (8) Coercion may be directed against the party or any person. (9) It is not necessary that IPC should be in force at the place where the coercion is applied. The effect of coercion is voidable at the desire of the aggrieved party. Undue Influence : Instead of physical force ;when mental force is used for getting the consent of the another party, when a dominant party misuses his influence to dominate the will of the weaker party, to get unfair advantage, in a contract is said to be influenced by undue influence. It is defined under Section 16. The legal rules relating to undue influence : (1) The relations subsisting between the parties to a contract are such that one of them is in a position to dominate the will of the other due to (i) Real or apparent authority. (ii) In case of fiduciary relation. (iii) In case of persons under mental or bodily stress. (2) The dominating party uses his position to obtain an unfair or undue advantage over the other party. Legal effect : Due to undue influence, the agreement becomes voidable at the option of the party whose consent was so caused. The court may set aside any such act under undue influence. A pardanashin woman is also given protection from undue influence. Fraud : Fraud is intentional misrepresentation or concealment of material facts of an agreement by any party to or by his agent with an intention to deceive and induce the other party to enter into an agreement. According to Section 17, fraud means and includes any of the following acts committed to a contract or with his connivance, or by his agent, with an intention to deceive another party thereto or his agent, or to induce him to enter into contract. (i) The suggestion as a fact of that which is not true by one who does not believe it to be true. (ii) The active concealment of a fact by one having knowledge or belief of the fact. (iii) A promise made without any intention of performing it, (iv) Any other act fitted to deceive, and (v) Any such act or omission as the law specially declares to be fraudulent. Essential Elements of Fraud :
(1) There must be a false representation either by words or by spoken words, induce the other party to enter into contract by active concealment of material fact. (2) It must be done by the party or his agent. (3) The representation must relate to a fact, the other party has been attracted to act upon the representation leading to fraud. (4) The representation intentionally done to commit a fraud must have been done before the conclusion of the contract. (5) The other party must have been deceived by fraud. Legal Effects : (1) Contract becomes voidable at the option of the party defrauded, (2) The defrauded party can sue for damages suffered or ask for restitution, and (3) The party can insist for the performance of the contract. Misrepresentation : It is innocent and unintentional false statement of fact told by one party to the other during the course of negotiation is called misrepresentation. According to section 18 misrepresentation means and includes : (i) The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it is not true. (ii) Any breach of duty which, without an intention to deceive, gains an advantage to the person committing it or any one claiming under him, by misleading another to his prejudice or to the prejudice any one claiming under him. (iii) Causing, however, innocently, a party to an agreement to make a mistake as to the substance of the thing which is subject of the agreement. Essential Elements of Misrepresentation : (i) It must be a misrepresentation of some material fact; (ii) It must be made before the concerned party enters into a contract. (iii) It must be innocent or unintentional statement. (iv) Misrepresentation may be committed by any of the following ways : (a) By positive statement. (b) By breach of duty. (c) By causing a mistake by innocent misrepresentation. Legal Effect of Misrepresentation : An aggrieved party suffering any loss as a result of misrepresentation can either rescind or avoid the contract altogether or can accept the contract but insist that he will be placed in such position in which he should have been, if the misrepresentation made had been true (section 19). Mistake : Mistake is one of the causes because of which the consent is said not to be free. It is a misconception or misimpression or misunderstanding or erroneous belief about something. According to Section 20, Where both the parties to an agreement are under a mistake as to a matter of fact essential to an agreement, the agreement is void. Mistake may be of two types viz (i) Mistake of Law, and (ii) Mistake of Fact Mistake of law may be two types : (i) Mistake of law of the land will be enforceable but mistake of foreign law is void. (ii) Mistake of fact: is as to material fact of the contract. Mistake of fact may be of two types : (1) Bilateral Mistake, and (2) Unilateral Mistake (1) Bilateral Mistake : Bilateral mistake is mutual mistake by both the parties to agreement and relating to (i) Mistake as to subject matter, and (ii) Mistake as to possibility of performance of the contract. (i) Mistake as the subject matter may be as to identity of subject matter, as to existence of subject matter, quality of the subject matter, quantity of product, as to price, mistake as to title, mistake as to existence of State of affairs and (ii) mistake is to possibility of performance. It may be of two types viz Physical and Legal impossibility. (2) Unilateral Mistake : The unilateral mistake means where one of the parties to a contract is under a mistake. As to the matter of fact, it is unilateral mistake. Such ontract is not voidable. But under such following conditions, contract of unilateral mistake also becomes void : (i) Mistake as to the identity of the party contracted with,
(ii) Mistake as to identity of attributes of contracting party, and (iii) Mistake as to the nature of the contract.
Some Important Short Questions-Laws and Practice of Banking-JAIBB

Laws and Practice of Banking-JAIBB Some Important Short Questions Define
Q.1
Contract.
Ans.: An agreement enforceable by Law is a Contract. [Section 2(h)] Q.2 What is implied contract?
Ans.: An agreement which is not made by written or spoken words of parties but it is evidenced from the acts or conduct of the parties or according to prevailing conditions. Q.3 What is quasi contract?
Ans.: The contract which is not created by proposal and acceptance but imposed by law based on the principle of equity. Q.4 Distinguish between void and voidable contract.
Ans.: A void contract is ab-initio void hence, cannot be enforced by law on the other hand enforceability of a voidable contract, depends upon the will of the aggrieved party. Q.5 What is the difference between void Agreement and Void contract? Ans.: Void agreement is void from beginning (ab-initio) whereas void contract becomes void when aggrieved party chooses to rescind it. Q.6 What is general and standing offer?
Ans.: The offer made to the public in general and any one can receive, it is general offer, whereas standing offer is an offer made as tender to supply goods as and when required amounts to a standing offer. Q.7 What is cross offer and counter offer?
Ans.: When two parties exchange identical offers in ignorance at the time of
each others offer, it is called cross offer, on the other hand when offeree offers variations in the original offer, it is called as counter offer. Q.8 What is executed and executory contract?
Ans.: A contract in which all the parties to the contract have performed their respective obligation is known as executed contract, whereas Executory contracts is one in which all or something still remain to be fulfilled or performed by the parties. Q.9 What is Bilateral and Unilateral contract?
Ans.: Bilateral contract is one in which both the parties exchange a promise to each other, which is to be performed in future, but still outstanding hence, it is called bilateral contract and similar to executory contract. On the other hand, Unilateral contract is one in it a promisor promises to do something. In such a contract, promisor binds himself to perform his promise but the offerer does not do so. Therefore, it is called Unilateral Contract. Q.10 Explain capacity to contract.
Ans.: The term capacity to contract means competence to legally enter into a contract that is legally binding to the parties. Q.11 Who is a Minor?
Ans.: A minor is a person who has not completed eighteen years of age. Who has not completed the age of 21 years in case the court has appointed guardian or superintendence of court of wards of minors property. Q.12 What is Consent?
Ans.: According to Section 13 Two or more persons are said to consent when they agree upon the same thing in the same sense. It is Unison or meeting of mind or consensus ad idem. Q.13 What is Coercion?
Ans.: According to Section 15 of Indian Contract Act, 1872, Committing any act forbidden by Indian Penal Code or detaining or threatening to detain property of another for getting consent is coercion. Q.14 Explain undue influence.
Ans.: When a dominating party misuses his influence to dominate the will of the weaker party to get undue or unfair advantage in a contract, then it is called undue influence (Section 16). Q.15 What do you mean by fraud?
Ans.: According to Section17, The term fraud is the intentional misrepresentation or concealment of material facts of an agreement by a party to or by his agent with an intention to deceive and induce the other party to enter into an agreement. Q.16 What do you mean by misrepresentation?
Ans.: It is defined under section 18. It means any innocent or without intentional false statement or positive assertion of fact made by one party to the other during the course of negotiation of a contract is known as misrepresentation. Q.17 What is mistake?
Ans.: It is defined under Section20 to 22, It is an erroneous belief about something.When the consent of one or both the parties to a contract is caused by misconception or erroneous belief, the contract is said to be induced by mistake. It is mistake of law and mistake of fact. The mistake of Indian Law is enforceable, not void but mistake of foreign law is void. When mistake made by a person it is unilateral mistake and mistake is made by both the parties, it is bilateral mistake. Q.18 What is consideration.
Ans.: It is quid-pro-quo means something in return. Hence, consideration is the price paid by promise for the obligation of the promise. Q.19 What is doctrine of privity of contract?
Ans.: A person who is not a party to the contract cannot sue upon it. Only the party to the contract can enforce the same. Q.20 Ans.: It Q.21 What means is from Ex-Nudo-Pacto bare promise, no is Nor-Oritur right of actio action can mean? arise.
What
maintenance?
Ans.: It is simply meaning the promotion of litigation in which one had no
interest. Q.22 What is Champerty? Ans.: It is a bargain where by one party agrees to assist the other in recovering property. Q.23 What is wagering Agreement?
Ans.: It is an agreement involving payment of a sum of money upon the determination of an uncertain event. Q.24 What do you mean by Agreement against public policy? Ans.: It simply mean whenever an agreement is harmful or injurious to public interest and welfare it is said to be against public policy. It is harmful to the social, political, economic and other interest and welfare of the public is called agreement opposed to public policy. Q.25 What is Contingent contract?
Ans.: It is a contract in which the promisor undertakes to perform the contract upon the happening or non happening of a specified future uncertain event, which is collateral to the contract (Section 32). Q.26 What is Appropriation of payments?
Ans.: In case of a debtor owes several distinct debts to the same creditor, he makes payment which is insufficient to satisfy all the debts. In such a situation a question arises as to which particular debt the payment is to be appropriated. Q.27 What is Novation?
Ans.: Novation means substitution of a new contract in place of an existing one with the consent of all the parties to the contract. Q.28 What is Rescission?
Ans.: It is cancellation of a contract by the consent of all the parties to it or by the aggrieved party to it. Q.29 Explain Remission.
Ans.: According to Section 63, Remission meant acceptance of a lesser performance in discharge of a whole obligation under a contract. Q.30 What is Waiver?
Ans.: When a party entitled to claim performance releases the other party from his obligation it is known as waiver. Q.31 What is supervening impossibility?
Ans.: If after making agreement it becomes impossible to fulfill the promise under contract, it is supervening impossibility. The contract becomes void. Q.32 What is liquidated damages?
Ans.: When the sum payable in the event of breach is decided by parties in advance, it is called liquidated damages. Q.33 What are exemplary damages? When they are awarded? Ans.: The damages which are awarded with a view to punish the defendant. These are awards in two cases i) On breach of contract of marriage and 2) wrongful dishonour of customers cheque by the bank. Q.34 What is the contract of Indemnity?
Ans.: A contract of indemnity means a contract by which one person promises to save the other from the loss caused to him by conduct or incident. Q.35 What is contract of guarantee?
Ans.: According to Section126 of contract Act A contract of guarantee as a contract to perform the promisor discharge the liability of a third person in case of his default. Q.36 What is bailment?
Ans.: According to section 148, bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them. Q.37 What is Lien? What are its types?
Ans.: Lien is a right to retain that which is in possession of a person and belongs to another until his demands are satisfied. There are two types of lien 1) The general lien which means to retain any property belonging to the other for anylawful payment and 2) It is relating to retain those goods, which are the subject matter of contract of particular lien. Q.38 What is agency?
Ans.: The relationship between agent and principal created by an agreement whereby agent is authorized by his principal to represent him and establish contractual relations with third party. Q.39 What is Agency by estoppel?
Ans.: If a person either by his conduct or words leads to another person to believe that a certain person is his agent, is called agency by estoppel. Q.40 What is agency by ratification?
Ans.: If the principal ratifies the act of a person done without authority, it is known as agency by ratification. Q.41 What is sub-agent and substituted Agent?
Ans.: A sub agent is a person employed by and acting under the control of the original agent in the business of the agency (Section191) on the other hand, a substituted agent is named by agent but appointed by the principal. He is liable to principal. Q.42 What is contract of Sale. How it is different from Agreement to sell? Ans.: A contract where seller transfers or agrees to transfer property, in goods to the buyer for a price on the other hand, a contract where seller agrees to transfer property in goods in future on fulfillment of certain conditions is called as agreement to sell. Q.43 How sale is different from Bailment?
Ans.: The intention of parties in case of sale is to transfer property in goods immediately, but in case of bailment, the property in goods is not transferred. Q.44 What is goods under sale of goods Act, 1930 and its types?
Ans.: According to Section2(7) Goods means every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.According to Section 6 (1 and 2) of the act there are three types of goods as : (1) Existing goods viz Specific, ascertained or unascertained goods (2) Future goods and (3) Contingent goods Q.45 What is condition and warranty?
Ans.: According to Section12(2), a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated, whereas warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives right to claim for damages but not to a right to reject the goods and treat the contract as repudiated (Section 12(3)]. Q.46 What is doctrine of Caveat Emptor?
Ans.: The buyer must take care when buying goods; it is not sellers duty to point out the defects in goods. Q.47 What is the meaning of Res Prit Domine?
Ans.: It simply means risks follows ownership. It is general rule that risk prima facie passes with ownership. Q.48 What is the meaning of Nemo dot quod non habit.?
Ans.: It means nobody can give what he himself has not or no seller can transfer a better title than he himself has. Q.49 What is unpaid seller?
Ans.: According to Section45 (1) the seller of goods deemed to be unpaid seller when whole price has not been paid or negotiable instrument received as payment dishonoured. Q.50 What are the rights of unpaid seller?
Ans.: He has two rights : (1) Right against the goods i.e. right of lien, right of stoppage of goods in
transit and right of resale. (2) Rights against buyer personally i.e. a) suit for price, b) damages for non acceptance, repudiation of the contract before the due date and suit for interest. Q.51 What is retracting the bid?
Ans.: The term retracting means withdraw or revoke. A bidder may retract his bid at any time before the compilation of sale. Any condition in an auction sale which forbids the bidder to retract his bid is void. Q.52 What is damping?
Ans.: Damping is an overt act of dissuade the prospective buyer from raising the price by pointing out defects in the goods, creating confusion in the mind of intending bidder and taking away him from the place of auction. Q.53 When knock out agreement becomes illegal?
Ans.: In the intention of the partner to knock out is to defraud a third party; such agreement is illegal. Q.54 What is the cardinal principle of partnership?
Ans.: It is based on the principle that business must be carried on by all or any of them acting for all. Q.55 Who is ostensible partner?
Ans.: Who is active partner who invested money into the firm actively participates in the functioning and management of the firm and shares profits. Q.56 Who is holding out partner? Ans.: If the person through his conduct and behavior representing himself as a partner, without being partner in the firm is called holding out partner. Q.57 What is dissolution partnership. the difference between dissolution of firm and of
Ans.: The dissolution of partnership between all the partners of a firm is termed as dissolution of the firm contrary to it extinction of relationship between some of the partners only, it is called dissolution of partnership.
Q.58 Who is a consumer under consumer protection Act, 1986? Ans.: Consumer is a person who buys goods or services for consideration which has been paid as promised or partly paid and partly promised or under any systems of deferred payment. Q.59 What is Consumer Dispute?
Ans.: It refers a dispute where the person against whom a complaint had been made, denies or disputes the allegations contained in the complaint. Q.60 What is unfair trade practice under consumer protection Act? Ans.: It means a practice which, for the purpose of promoting the sale, use or supply of any goods or for any goods or for the provision of any service adopts any unfair ;method or defective practices. Q.61 How many consumer protection councils are there under the Act? Ans.: There are two types (i) The Central Consumer (ii) The State consumer protection council.
Laws and Practice of Banking
of these Protection
councils council
and
Laws and Practice of Banking-JAIBB

Short Notes: CLEARING HOUSE: Clearing House is a place where all the bankers of a town assemble to exchange cheques, drafts, bills etc. drawn on each other. The old practice of receiving the payment of the cheque drawn on other banks was to send bank clerk with all such cheque and other instruments to collect the cash from various banks. Since this method was time-consuming and aweful, the Clearing House system was introduced where all the member bankers daily assemble to settle their drawings upon each other. February 22, 2012
Short Note: Law & Practice of Banking
Laws and Practice of Banking-JAIBB
Short Note:
PAYMENT IN DUE COURSE: A cheque is discharged by payment in due course, that is to say payment made by the drawee-banker to the holder of the cheque in good faith and without notice that his title to the cheque is defective. The holder to whom payment is made may be the payee, an indorsee or the bearer according to the nature of the instrument, or the way in which it has been indorsed. A thing is deemed to be done in good faith where it is in fact done honestly, whether it is done negligently or not. In ordinary circumstances, a cheque drawn in proper form, and complete in every particular, must be paid or refused payment as soon as it is presented. But it the circumstance connected with its presentation are such as to raise reasonable suspicious in the banker would also be entitled to postpone payment it the cheque were drawn in an unusual manner or bore upon its face peculiarities that would raise doubts in and ordinary person's mind as to the genuineness of the order. February 21, 2012
Short Notes: Law & Practice of Banking
BANKING DIPLOMA EXAMINATION (Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Laws and Practice of Banking -JAIBB
Short Notes: GARNISHEE ORDER: A garnishee order is an order of a court asking the banker to stop either absolutely or partially the usual operation in the account of a particular customer, thereby attaching the funds of the account in the hands of third party or as the court may determine and direct for the disposal of such funds. SET OFF: Set-off is the legal right by which a debtor is entitled to take into account a debt owing to him to the creditor when being sued for a debt due from him to the creditor. In order that this right of set-off may be exercised, the debt must be a sum certain, due by and to the same parties, and in the same right. March 6, 2012
Business Organisation-Organization and Management-JAIBB
Organization & Management-JAIBB Business Organisation
Q.1 What do you mean by Business Organisation? Also explain its characteristics and nature of Business Organisation? Ans.: A Business organisation refers to any industrial, commercial or service rganisation which produces goods and or services for sale, or engages in distributing or assists in the process thereof. It is to represent any collection of business resources factories, warehousing, machinery, material, employee etc.,and the planned use of which is limited within the framework of a one man business, partnership, company, are other form of business organisation. In the words of Richard Norman Owens, A business organisation is an enterprise engaged in the production or distribution of goods for sale in a market or rendering services for a price. In the words of Bayard O Wheeler, A business firm is an institution, company or enterprise which is engaged in buying or selling, being owned by one person or group of persons, who manage it within certain laid down creative policies. Characteristics and Nature of Business Organisation : (i) An association of persons or group. (ii) A pluralistic institution. (iii) Different forms. (iv) Wide scope of activities. (v) Coordination of resources. (vi) Created utilities. (vii) Intensity of capital. (viii) Increasing trend in forming into combination. (ix) Customer satisfaction. (x) Dynamic Environment. (xi) It is a system an organ of the society. (xii) Customer orientation. (xiii) Socio-economic institution. (xiv) Operating in different sectors of the economy. (xv) An institution with multiple objectives.
(xvi) Faster growth of service organisation. (xvii) Global operation. (xviii) Independent and separate role of entrepreneur and manager. (xix) Innovations and marketing as basic functions. (xx) Government control and regulation. (xxi) Improves the standard of living of people. Q.2 Explain the significance of Business Organisation. Ans.: The Significance of business may classified into the following four categories; namely : (1) Significance to National Economy (2) Significance to Business itself (3) Significance to Community (4) Significance from other point for view (1) Significance to National Economy : The significance of business to a nation may be expressed by the following facts : (i) Optimum and profitable use of resources. (ii) Balanced industrial growth. (iii) Source of national income. (iv) Faster economic growth in the country. (v) Contributes of national prosperity. (vi) Better utilisation of human resources. (vii) Increase in the standard of living of the people. (viii) Source for meeting import requirements. (ix) To meet the obligations of development planning. (x) Larger creation of employment. (xi) Eradication of poverty. (xii) Capital formation. (xiii) Development of labour and capital markets. (2) Significance to Business itself : The significance of business from the point of view of business itself, may be stated as below : (i) Large scale production and efficient distribution. (ii) Creation of healthy competition. (iii) Fulfillment of social responsibility. (iv) Decrease in the cost of production. (v) Helps to develop managerial skill. (vi) Greater utilisation of production capacities. (vii) Development of the undertaking. (viii) Profitable sales volume. (ix) Specialisation in production. (3) Significance to Community : The Significance of business from the point of view of community is discussed below :
(i) Uplifts the standard and quality of life. (ii) Development of labour markets. (iii) Human prosperity. (iv) Creation of employment. (v) Creates habits of saving. (vi) Provides goods and services at reasonable prices. (vii) Advantage of form, place, time and possession utilities. (viii) Consumer education. (ix) Attention towards customer grievances. (x) Appointment of efficient and experienced salesmen. (4) Significance to other point of view : The other significance of business may be discussed under the following heads : (i) Promotion of international trade. (ii) Closer cultural relations between countries. (iii) Helps in maintaining political peace. Q.3 What is Business Environment and what are its components? Ans.: The environment of business is an extremely complex and dynamic phenomenon. It is the product of the technological, political legal, economic, social cultural, global and natural factors among which it functions. The environmental factors vary from country to country, even region to region. Environment is a mixture of economic, social, political, legal and technological forces. Arthur M. Weimer writes the business environment is the climate or set of conditions; economic, social, political or institutional in which business activities are conducted. In the wards of William Gluck and Jauch, Environment contains the external factors that create opportunities and threat to the business. This includes socioeconomic conditions, technology and political conditions. Component of Business Environment : The component of Business Environment are as follows : Q.5 What do you mean by Business Ethics? Explain its main characteristics and scope of Business Ethics? Ans.: Business ethics is concerned with day to day behaviour of business in a business situation. Business ethics is rapidly becoming an important subject of study replacing yesterdays social responsibility of business. In the words of Robert Gueinner and others, Business ethics may be defined as those principles, practices and philosophies that are concerned with moral judgments and good conduct, as they are applicable to business situations.
In the words of Rogene A. Buchholz, Business ethics refers to right or wrong behaviour in business decisions. Thus, business ethics relates to the behaviour of a businessman in a business situation. Characteristics or Assumption of Business Ethics : For the understanding business ethics, it is necessary to know its important characteristics there are : (i) As a discipline. (ii) It is art and science both. (iii) Ethics is different from social morality. (iv) Not based on emotions & sentiments. (v) Business ethics is not affected by social approval or disapproval. (vi) An ancient concept. (vii) A universal philosophy. (viii) Dynamic philosophy (ix) Theology is the basis of business ethics. (x) Study of goals and means. (xi) Recognition of moral responsibility. (xii) More greater than law. (xiii) Different from social responsibility. (xiv) Hermony between different roles. (xv) Good intention. Scope of Business Ethics : The scope of business ethics or the issues in business ethics are as follows : (i) Issues relating to objectives of Business. (ii) Issues relating to employees. (iii) Issues relating to competitive institutions. (iv) Issues relating to Government. (v) Issues relating to national interest. (vi) Issues relating to owners of business. (vii) Issues relating to customers. (viii) Issues relating to creditors. (ix) Issues relating to local community. Q.6 Is Good Ethics promotes Good Business explain? Ans.: Well known authorities like Raymond Baumhart, Brener and moltander etc proves in their finding that only those business can exists on a long term basis which conduct their activities on ethical grounds. Their findings were supported by learned, doolby and Katz. At the same time, there are certain other who do not accept this findings that good ethics promotes good business. Although they are few in numbers, their agreements cannot be overlooked. The following paragraphs give the arguments in favour and against, good ethics promotes good business.
Arguments in Favour : Some of the important arguments in favour is as follows : (i) Satisfaction of sub conscious mind. (ii) Goodwill of Business and Businessman (iii) It increases Mutual Trust and confidence. (iv) Sound Business Insurance. (v) Helps in Professionalisation of management. (vi) Initiative for others. (vii) Relieves from Tensions and worries. (viii) Greater zeal and productivity. (ix) Perpetual succession. (x) Essential in the present situation. Arguments against the view of Good Ethics promote Good Business : The critics gives the following argument in support of their claim : (i) No reward for ethical conduct. (ii) No resistance from officers. (iii) Demand of the day. (iv) Difficult to decide in a situation of dilema.
March 17, 2012
Accounting for Financial Services: Accounting Standard
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Accounting for Financial Services-JAIBB Accounting Standard
Q.1 Define Accounting Standards and discuss important features of AS-I, AS-9, AS-14, AS-20. Ans.: Accounting Standard: Accounting standards are the policy documents issued by the recognized expert accountancy body relating to various aspects of measurements, treatment and disclosure of accounting transactions and events. AS-I : Disclosure of Accounting Policies : The standard issued by Accounting standard Board (ASB) deals with the disclosure of significant accounting policies followed in preparing and presenting financial statements. Such disclosure would facilitate a meaningful comparison between financial statements of different enterprise. Following points are considered in this disclosure: Going concern, consistency and accrual have been generally accepted as fundamental accounting assumptions. The accounting policies refer to the specific accounting principles and the methods of applying those principles adopted by the enterprise in the preparation and presentation of financial statements. The areas in which different accounting policies may be adopted are :_ Methods of depreciation, depletion and amortization. Valuation of Inventories, Investments, Goodwill, fixed assets. _ Treatment of Contingent liabilities, retirement benefits. The basis for the selection of accounting policies is that they should represent a true and fair view of the state of affairs of the enterprise. Prudence, Substance over form and Materiality are the major consideration governing the selection of accounting policies. Any change in an accounting policy which has a material effect should be disclosed and the significant accounting policies should normally be disclosed in one place. AS-9: Revenue Recognition: Revenue recognition is mainly concerned with the timing of recognition of revenue in the statement of profit and loss of an enterprise. The amount of revenue arising on a transaction is usually determined by agreement between the parties involved in the transaction. The statement is Fore more detail:- concerned with the bases for recognition of revenue in the statement of profit and loss account of an enterprise. The statement is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from: The sale of goods; The rendering of services; and The use by others of enterprise resources yielding interest, royalty and divided. Sale of Goods : A key criterion for determine when to recognize revenue from a transaction involving the sale of goods is that the seller has transferred the property in the goods to the buyer for a consideration. The transfer of property in goods, in most cases, results in or coincides with the transfer of significant risk and rewards of ownership to the buyer.
Rendering of Services: Revenue from service transaction is usually recognized as the services is performed, either by the proportionate completion method or by the completed service method (i) Proportionate completion method: - Performance consists of the execution of more than one act. Revenue is recognized under this method would be determined on the basis of contract value, associated costs, number of acts or other suitable basis. (ii) Completed service method: - Performance consists of the execution of a single act. Revenue is recognized when the sale of final act takes place. The use by others of Enterprise Resources Yielding interest, Royalties and Dividends. (i) Interest accrues (for the use of cash resources) is recognized on the time basis determined by the amount outstanding. (ii) Royalties accrue (for the use of know how, patents, trade marks) in accordance with the terms of relevant agreement. (iii) Dividends rewards (from the holding of investment in shares) is recognized when a right to receive payment is established. Recognition of revenue requires that revenue is measurable and that at the time of sale of goods, or the rendering of services it would not be unreasonable to expect ultimate collection. AS-14 : Accounting for Amalgamations (Come into effect from 1-4-1995): This Statement deals with accounting for amalgamations and the treatment of any resultant goodwill or reserves. This statement is directed principally to Fore morecompanies although some of its requirements also apply to financial statement of other enterprise. The following terms are used in this statement with the meaning specified :(i) Amalgamation means an amalgamation present to the provision of the companies act 1956 or any other statute which may be applicable to companies. (ii) Transferor Company means the company which is amalgamated into another company. (iii) Transferee Company into which a transferor company is amalgamated. An Amalgamation may be either: (a) in the nature of merger, or (b) in the nature of purchase. In case of an amalgamation in the nature of merger following conditions should be satisfied:(i) All assets and liabilities will be the assets and liabilities of Transferee Company. (ii) Share holders holding not less than 90% of the face value of the equity shares of the transferor company will be the shareholder of Transferee Company. (iii) Payment will be made in equity shares to the equity share holders except cash may be paid in respect of any fractional shares. (iv) Business of the transferor company will be continued by the Transferee Company. (v) Book values will be same in the books of Transferee Company. When any one or more above conditions are not satisfied, an amalgamation should be considered to be an amalgamation in the nature of purchase. For an amalgamation in the nature of merger, pooling of interest method is applied and for an amalgamation in the nature of purchase purchase method is applied. AS-20: Earning Per Share (Come into effect from 1-4-2001) : It is mandatory in nature, from that date, in respect of enterprise whose equity shares are listed on a recognized stock exchange in India. The objective of this statement is to prescribe principles for the determination and presentation of earning per share which will improve comparison of performance among different enterprises for the same period and among different accounting periods for the same enterprise. An enterprise should present basic and diluted earnings per share on the face of the statement of profit and loss for each class of equity shares that has a different right to share in the net profit for the period. (A) Basic Earning per Share: Basic earnings per share should be calculated by dividing the net profit or loss (after deducting preference dividend and any attributable tax there to) for the period, attributable to equity share holder by the weighted average number of equity shares outstanding during the period. (B) Fair Value per Share: Fair value per share is calculated by adding the aggregate fair value of the shares immediately prior to the exercise of the rights to the proceeds from the exercise of the rights, and dividing by the number of shares outstanding after the exercise of the rights. (C) Diluted Earning per Share: For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period should be adjusted for the effects of all dilutive potential equity March 16, 2012
shares.
Accounting for Financial Services : Principles, Concepts and Conventions
Accounting : Principles, Concepts and Conventions

Q.1 Define Accounting. What is GAAP (Generally accepted Accounting Principles)? Explain briefly the Accounting Principles. Ans Accounting may be defined as the process of recording, classifying, summarizing and interpreting the financial transactions and communicating the results there of to the persons interested in such information. GAAP (Generally Accepted Accounting Principles): It is a Technical concept that describes the basic rules, concepts, conventions and procedures that represent accepted accounting practices at a particular time. Accounting principles can be divided into two parts: 1.Principle 2. Concepts & Conventions The term concept includes thosebasic assumptions, conditions and ideas upon which the science of accounting is based. Conventions used to signify the customs or traditions as a guide to the preparation of accounting statements. Accounting Concepts : (1) Entity Concept: According to this concept business is treated as a separate unit and distinct from its proprietors.
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Accounting for Financial Services -JAIBB
(2) Dual Aspect Concept: According to this concept every transaction has two sides at least. If one account is debited, any other account must be credited. Every business transaction involves duality of effects. (i) Yielding of that benefit (ii) The giving of that benefit. (3) Going Concern Concept: This concept assumes that the business will continue to exist for a long period in the future. There is neither the necessity nor the intention to liquidate it. (4) Accounting Period Concept: According to this concept the entire life of the concern is divided in time intervals for the measurement of profit at frequent intervals. (5) Money Measurement Concept: Only those transactions and events are recorded in accounting which is capable of being expressed in terms of money. (6) Cost Concept : According to this concept: (a) An asset is ordinarily entered in the accounting records at the price paid to acquire it. (b) This cost is the basis for all the subsequent accounting for the asset. (7) Matching Concept: In determining the net profit from business operations all cost which is applicable to revenue of the period should be charged against that revenue. (8) Accrual Concept: This concept helps in relating the expenses to revenue for a given accounting period. (9) Realization Concept: According to this concept, revenue is recognized when sale is made and sale is considered to be made when a goods passes to the buyer and he becomes legally liable to pay for it. (10) Verifiable objectivity Concept: This concept means that all accounting transactions that are recorded in the books of accounts should be evidenced and supported by business documents. Conventions: Accounting conventions are of following types:(1) Convention of Disclosure: According to this convention accounting reports should disclose fully and fairly the information they purport to represent. The information which are of material interest to proprietors. (2) Convention of Materiality: The accountant should attach importance to material details and ignore insignificant details. (3) Convention of Consistency: This convention describes that accounting principles and methods should remain consistent in order to enable the management to compare the results of the two periods. These principles should not be changed year after year. (4) Convention of Conservatism: According to this convention, in the books of accounts all anticipated losses should be recorded and all anticipated gains should be ignored. February 29, 2012
Accounting for Financial Services- JAIBB

Accounting for Financial Services- JAIBB

Introduction to Accounting Q.1. What is meant by Accounting? Give two objectives of Accounting. Ans. According to the American Institute of Certified Public Accountants (AICPA) in theirAccounting Terminology Bulletin No. 1, Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof. Two objectives of Accounting are: (i) To keep systematic records: Its main objective is to keep complete record of business transactions. It avoids the possibility of omission and fraud. (ii) To calculate profit or loss: Accounting helps to ascertain the net profit earned or loss suffered on account of business transactions during a particular period. To ascertain profit or loss at the end of each accounting period Trading and Profits & Loss of the business is prepared. Q.2. What do you mean by Accounting Concepts? Ans. Accounting Concepts provide a base for accounting process every enterprise has to consider basic concepts at the time of preparing its financial statements. According to Kohler concept as, A series of assumptions constituting the supposed basis of a system of thought or an organized field of an endeavour. Q.3. What is separate entity concept? Ans. According to this concept, the business and businessman are two separate and distinct entities.Business is treated as a unit separate and distinct from its owners, managers and others. Therefore,proprietor is treated as a creditor of the business to the extent of capital invested by him in the business. It is applicable to all forms of business organizations, i.e., sole proprietorship, partnership or a company. Q.4. What do you understand by going concern concept? Ans. According to this concept it is assumed that the business will continue to exist for a long period in the future. According to this concept we record fixed assets at their original cost and full cost of the asset would not be treated an expense in the year of its purchase itself. Q.5. What do you understand by convention of consistency? Ans. According to this convention accounting principles and methods should remain consistent from one year to another. The rationale for this concept is that changes in accounting treatment would make the Profit & Loss and Balance Sheet unreliable for end users. For example there are several methods of providing depreciation on fixed assets i.e. fixed installment method, diminishing balance method etc., But it is expected that the business entity should be consistent to follow accounting method.
Q.6. Explain Accounting Equation. Ans. Accounting equation is also termed as balance sheet equation. It signified that the assets of a business are always equal to the total of capital and liabilities. It can Assets Capital = Assets + Liabilities be = represented Liabilities + as: Capital
Short: Question-Answer Q.1. Give advantages of Accounting. Ans. Advantages of accounting are: (i) Provides Complete and Systematic Record: In business there are so many transactions therefore it is not possible to remember all transactions. Accounting keeps a systematic record of all the business transactions and summarized into financial statements. (ii) Information Regarding Financial Position: Accounting provides information about the financial position of the business by preparing a balance sheet at the end of each accounting period. (iii) Helpful in Assessment of Tax Liability: Accounting helps in maintaining proper records. With the help of these records a firm can assessed income tax of sales tax. Such records are trusted by income tax and sales tax authorities. (iv) Information Regarding Profit or Loss: Profit & Loss Account is prepared at the end of each accounting period to know the net profit earned or net loss suffered at the end of each accounting period. Q.2. Give limitations of Accounting. Ans. Limitations of Accounting are: (i) Possibilities of Manipulation: Accounts can be manipulated, so that the financial statements may disclose a more favourable position then the actual position for example closing stock may be overvalued in accounts. (ii) It includes only Economic Activities: Non-monetary transactions are not recorded in accounts. Transactions which can not be expressed in money cannot find place in accounts. Qualitative aspects of business units like management abour relations, efficiency of management etc. are wholly omitted from the books of accounts. (iii) Price Level Changes not Considered: Fixed assets are recorded in accounts at their original cost. Sometimes assets remain undervalued particularly land and building. Effect of price level changes is not considered at the time of preparing accounts. (iv) Influenced by Personal Judgments: An accountant has to use his personal judgment in respect of many items. For example, it is very difficult to predict the useful life of an asset. February 28, 2012
Accounting for Financial Services-JAIBB
Accounting for Financial Services- JAIBB Accounting for Money and Banking
In these notes we will find the following topics:

I. Bank balance sheets II. T-accounts III. Areas of bank management I. BANK BALANCE SHEETS Balance sheets are the standard accounting tool for listing a bank's assets and liabilities, which is all that a bank's balance sheet is. Drawing one up is fairly simple: -- Step one: Draw a big lower-case "t." -- Assets (how the bank uses its funds) go on the left side. -- Liabilities (sources of funds, or how the bank gets its funds) go on the right side. You may have seen a similar table in introductory macro. The numbers in parentheses are the proportions of the total. ASSETS Reserves (cash on hand or stored with Fed) (1%) LIABILITIES + BANK CAPITAL DEPOSITS (checking 5% + savings & CDs 56% = 61%)
Cash items in the process of collection (2%) Securities (government and other bonds, mortgage-backed securities) (23%) LOANS to firms, individuals, etc. (65%) Other assets (9%)
Borrowings (loans from other banks and nonbanks) (21%) Other liabilities (including borrowings from foreign sources) (8%)
Bank capital ( = Total assets - Total liabilities) (10%) -------------------------------------------------------- -------------------------------------------------------TOTAL ASSETS (100%; $11.2 trillion in TOTAL LIABILITIES + BANK CAPITAL March 2008) (100%; $11.2 T) For the balance sheet to "balance," the two sides must add up to the same amount. However, a healthy bank will not have equal amounts of assets and liabilities, but will instead have more assets than liabilities. Assets - Liabilities = Bank capital (or Net worth) What we do to make the two sides equal is to add Bank capital to the Liabilities side. (Note that it now bears the heading "Liabilities + Bank Capital." Bank capital could be either equity (shares of stock in the bank) or retained earnings. We normally list the most liquid items first. (The general rule is to list items in descending order of liquidity.) On the asset side, then, the first item on a bank's balance sheet is reserves, which banks keep to meet deposit outflows (withdrawals, checks drawn on the bank, etc.) and because they're required to do so by the Fed. -- Banks are required by the Fed to hold a certain proportion of their deposits as reserves, mainly to guard against "runs on the bank" and to allow the Fed to manipulate the money supply. Reserves can be held either as cash or in accounts at the Fed. Currently, the required reserve ratio (RRR) is 10% on checking accounts and zero on savings and money-market accounts. The difference between a bank's total reserves and its required reserves is its excess reserves: excess reserves (ER) = actual reserves - required reserves = actual reserves - (.10)(checking deposits) Excess reserves are mainly kept by banks as a precaution. In good times, banks generally try to keep as few excess reserves as possible, since they earn no interest on them. The Fed's reserve requirements are typically much higher than what banks actually need in order to be able to handle deposit outflows. II. T-ACCOUNTS ... are a modified form of balance sheets, useful for examining how a bank reacts to changes. Instead of laboriously listing all of the bank's assets and liabilities, T-accounts list only thechanges in the bank's assets and liabilities. For example, suppose I won the NCAA basketball pool and get paid with a check for $100, drawn on Prof. Spizman's account at the Key Bank, and deposit it into my checking account at Pathfinder Bank. The initial change, before the check clears, to my bank's balance sheet will be as follows:
Pathfinder Bank, BEFORE Check Clears ASSETS (A) LIABILITIES (L) Cash items in the process of Checking deposits + collection + $100 $100 At Key Bank, before the check clears there is no change on Key's balance sheet, because Key has no way of knowing that someone has written a check on a Key account. They don't find out about that until the check has gone to the New York Fed to be cleared. After the check clears, the change in Pathfinder Bank's balance sheet is just a bit different, and Key's balance sheet will be a lot different: Pathfinder Bank, AFTER Check Clears ASSETS (A) Reserves at Fed + $100 LIABILITIES (L) Checking deposits + $100
If the reserve requirement is 10%, the bank has an increase in excess reserves of --? (Change in) excess reserves = total reserves - required reserves = $100 - (10%)($100) = $100 - $10 = $90 It will probably loan out those excess reserves, so as to earn interest on them. Key Bank, AFTER check clears ASSETS (A) Reserves at Fed - $100 LIABILITIES (L) Checking deposits - $100
The change in Key's excess reserves is negative, since only $10 had to be held as reserves against those $100 in checking deposits yet $100 cash is now gone. So if the bank had zero excess reserves before, it would now have excess reserves of -$90 (= -$100 -(-$10)), or a reserve deficiency of $90. To obtain that $90, the bank would have to borrow some funds from the Fed or another bank, borrow from a corporation (repo), sell off some of its assets (e.g., T-bills), issue commercial paper, or call in some of its loans. Of those options, calling in some of its loans (usually accomplished by simply not renewing short-term loans) is the one the bank likes least, because its loans are its most profitable business -- a bank, after all, makes a profit by obtaining funds at a relatively low interest rate (zero on basic checking accounts) and loaning them out at much higher interest rates . Also, the customer whose loan is called in will have to take his business elsewhere, and might do so permanently; since banks hate to lose good customers, they generally avoid calling in loans early. III. AREAS OF BANK MANAGEMENT Going down a typical balance sheet, we can note four different areas of primary concern to a profit-maximizing, risk-averse bank management team. A bank's managers have to keep track of four different primary areas: (1) LIQUIDITY MANAGEMENT: make sure the bank has just enough cash reserves and liquid assets to meet (net) deposit outflows and its reserve requirements at the Fed. -- Here we see the usual risk-return relationship. Reserves don't pay interest, so keeping too much in the way of reserves reduces the bank's overall profitability. But holding just the bare minimum
of reserves exposes the bank to liquidity risk, i.e., the risk of failing to meet its Fed reserve requirements or being unable to meet an unexpectedly large deposit outflow. (2) ASSET MANAGEMENT: acquire assets (loans, securities) with acceptably low risk and high return. -- Several types of risk come into play here. ---- First, there is credit risk, or default risk -- the possibility that some of the loans owed to the bank won't be repaid, or that some of its bonds and other securities might default. ---- Bank loans and bond holdings are also subject to interest-rate risk -- the possibility that market interest rates might go up, causing the bank's fixed-rate loans to lose value. ------ Because interest-rate risk is particularly severe on household mortgages, which typically have a length of 30 years, banks tend to sell their mortgages off as quickly as possible, to government agencies like the Federal National Mortgage Association (which buy them up and repackage them as securities to sell to the public). ---- (In addition, especially for banks that are active in financial derivatives markets, there istrading risk, or market risk, if, say, a derivatives contract ends up obliging the bank to sell a financial instrument for less than it paid for it.) -- As with household investors, banks can reduce some of their risk through diversification, e.g., by making different kinds of loans and holding securities of varying maturity lengths. (3) LIABILITY MANAGEMENT: acquire funds (deposits, borrowings) at low cost -- A good combined yardstick of asset and liability management together is the bank's interest-rate spread: the difference between the average interest rate at which the bank loans (earns) money and the interest rate at which the bank borrows (pays) money. -- Interest-rate risk comes into play here as well. Higher interest rates can deal a bank a doubleblow -- the PDV of the bank's long-term fixed-rate loans and bonds takes a beating, while the bank has to pay higher interest rates to its depositors in order to be competitive. (4) CAPITAL ADEQUACY MANAGEMENT: decide how much capital (net worth) the bank should have and acquire it -- Capital adequacy management is similar to liquidity management. Just as a bank may hold excess reserves to guard against unexpected deposit outflows, it needs to have a decent cushion of funds -- specifically, a large enough excess of assets compared with its liabilities -- to protect it from an unexpected drop in the value of its assets, since virtually all of its loans carry at least some risk of default. ---- A bank with negative bank capital is insolvent. -- Banks are required by federal authorities to meet certain minimum capital requirements. The level of bank capital can be either too high or too low: too much bank capital dilutes the shareholders' equity, thus reducing their returns (i.e., their return on equity), whereas too little puts the bank at risk of insolvency. -- In the economic crisis of 2008-2009, bank capital is absolutely crucial, because many banks appear to be insolvent, especially those that had large quanitities of mortgage-backed securities among their assets. Those securities have lost much of their value, so probably a good many banks that held them are now insolvent. But virtually nobody knows the exact value of those securities, as there's not much of a market for them at present (winter 2009) -- hedge funds and various bargain hunters are willing to buy them at rock-bottom prices, but banks would rather hold onto them than sell them for so little. So depending on how one calculates the values of those mortgage-backed securities, a particular bank might still be solvent or it might not.
A simple way to memorize the four areas of bank management: just remember the acronym"LALC" -- for Liquidity management, Asset management, Liability management, and Capital adequacy management. Q: A bank sells a 1-year CD for $100,000, at an interest rate of 3%. It uses the proceeds to buy $100,000 worth of 10-year Treasury bonds paying 6%. What would happen if all interest rates rose by 2 percentage points the next day? (What kind of risk has the bank exposed itself to?) A: The PDV (and hence the balance-sheet value) of those long-term bonds would drop sharply if market interest rates rose by 2%. This would lower the value of the bank's assets. On the liabilities side, the PDV of the 1-year CD would drop, too, but not by as much, because the PDV's of short-term interest-bearing assets are less affected by interest-rate changes than are the PDV's of long-term bonds. (In other words, long-term assets have more interest-rate risk than short-term assets.) The value of the bank's assets would decline more than the value of the bank's liabilities, which is bad news for the bank.
February 21, 2012
Short Notes: Accounting for Financial Services
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Accounting for Financial Services -JAIBB
Short Notes:
Accrual Basis Accounting: Under the Accrual basis accounting system transactions those changes a company's financial statements are recorded in the periods in which the events occur. Accounting: Under the Cash basis accounting revenue is recorded when cash is received and a expense is recorded when cash is paid.
Cash Basis
Work Sheet: A work sheet is a multiple column form that may be used in the adjustment process and in preparing financial statements.
April 7, 2012
Marketing of Financial Services: Market Segmentation
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Market Segmentation
A. Levels of market segmentation.
1. Segment marketing : 2. Niche marketing : 3. Local marketing : 4. Individual marketing

B. Pattern of market segmentation.
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1. Homogeneous preferences : 2. Diffused preference : 3. Clustered preference :

C. Market segmentation procedure.
1. Survey stage : 2. Analysis stage : 3. Profiling stage :

D. Basis for segmenting consumer markets.
1. Geographic segmentation : 2. Demographic segmentation : (a) (b) (c) (d) (e) Age and life - cycle stage : Gender : Income : Generation : Social class :
3. Psychological segmentation : (a) Lifestyle : (b) Personality : (c) Values : 4. Behavioural segmentation : (a) Occasions : (b) Benefits : (c) Users status : (d) Usage rate : (e) Loyal status :
(iv)
(i) Hard core loyals : (ii) Split loyals : (iii) Shifting loyals : Switchers : (f) Buyer readiness stage : (g) Attitude : 5. Multi attribute segmentation ( Geoclustering ) : 6. Targeting multiple segments :
E. Major segmentation variable for business markets.
1. Demographic : (a) Industry : (b) Company size : (c) Location : 2. Operating variables : (a) Technology : (b) User or nonuser status :
(c) Customer capabilities :
3. Purchasing approach : (a) Purchasing - function organization : (b) Power structure : (c) Nature of existing relationship : (d) General purchase policies : (e) Purchasing criteria : 4. Situational factors : (a) Urgency : (b) Specific application : (c) Size of order : 5. Personal characteristics : (a) Buyer - seller similarity : (b) Attitude toward risk : (c) loyalty :
F. Effective segmentation.
1. 2. 3. 4. 5. 1. 2. 3. 4. 5.
Measurable : Substantial : Accessible : Differentiable : Actionable : Single - segment concentration : Selective specialization : Product specialization : Market specialization : Full market coverage :
G. Selecting the market segments.
April 4, 2012
Marketing of Financial Services: Buyer Behaviour

BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Buyer Behaviour
A. Major factors influencing buying behaviour. The aim of marketing is to meet and satisfy target customers needs and wants. Some time customer say something but actually do different. Their buying behaviour influenced by many factors.
1. Cultural factors : (To Get Download Option Click Read More) The culture is the most fundamental determinant of a persons wants and behaviour. (a) Culture : Culture has a broadest and deepest influence on buying behaviour. The growing child acquires a set of values, perceptions, preferences, norms and behaviour through his or her family and other key institutions. For example, a child growing up in the United States is exposed to the following values : achievement and success, activity, efficiency and practicality, progress, material comfort, individualism, freedom, external comfort, humanitarianism and youthfulness. (b) Subculture : Each culture consist of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups and geographic regions. Many subcultures make up important market segments and marketers often design their product or services and marketing programs according to consumers needs. (c) Social class : Social classes are relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behaviour. Social classes do not reflect income alone, but also other indicators such as occupation, education and area of residence. Social classes differ in dress, speech patterns, recreational preferences and many other characteristics. Social classes have several characteristics. First, those within each social class tend to behave more alike than persons from two different social classes. Second, persons are perceived as occupying inferior or superior position according to social class. Third, social class is indicated by a cluster of variables - for example, occupation, income, wealth, education and value orientation - rather than by any single variable. Fourth, individuals can move from one social class to another - up or down - during their life time. 2. Social factors : A consumers buying behaviour is influenced by such social factors as reference groups, family and social roles and status. (a) Reference groups :
A persons reference groups consists of all the groups that have a direct ( face to face ) or indirect influence on the persons attitudes or behaviour. Groups having direct influence on a person are called membership groups. Some membership groups are primary groups, such as family, friends, neighbors and co workers, with whom the person interacts fairly continuously and informally. People also belong to secondary groups, such as religious, professional and trade - union groups, which tend to be more formal and require less continuous interaction. Their reference groups in at least three ways significantly influence people in our society. Reference groups expose an individual to new behaviours and lifestyles. Their attitudes and self - concepts also influenced by the reference groups. And they create pressures for conformity that may affect actual product and brand choices. So, marketers try to identify their target customers reference groups, which influence varies among product and brand choices. (b) Family : (c) Roles and status : 3. Personal factors : (a) Age and stage in the life cycle : (b) Occupation and economic circumstances : (c) Personality and self - concept : 4. Psychological factors : (i) (ii) (iii) (i) (ii) (iii) (a) Motivation : Freuds theory : Maslows theory : Herzbergs theory : (b) Perception : Selective attention : Selective distortion : Selective retention : (c) Learning : (d) Beliefs and attitudes :
B. Buying roles.
It is easy to identify the buyer for many products. But even the marketers must be careful in making their targeting decisions, because buying roles can be change. Five types of people might play roles in a buying decision. These are : 1. Initiator : A person who first give or suggest the idea of buying the products or services. 2. Influencer : A person whose view or advice influence the buying decision. 3. Decider : A person who decides on any component of a buying decision, whether to buy, what to buy, how to buy, when to buy and where to buy. 4. Buyer : The person who makes the actual purchase of products or services. 5. User : A person who consumes or uses the products or services.
C. Buying behaviour.
Consumer decision - making varies with the different type of products or services buying decision. We can classify the consumer buying behaviour into four categories, these are : 1. Complex buying behaviour : Complex buying behaviour involves a three - step process. First, the buyer develops beliefs about product. Second, he or she develops attitudes about the product. Third, he or she makes a thoughtful choice. Consumers engage in complex buying behaviour when they are highly involved in a purchase and aware of significant differences among brands. This is usually the case when the product is expensive, bought infrequently, risky and highly self - expressive. Typically the consumer does not know much about the product category. So, the marketer of a high - involvement product must have to understand the consumers information gathering and evaluation behaviour nature. 2. Dissonance - reducing buying behaviour : Sometimes the consumers are highly involved in a purchase but see little difference in brands. The high involvement is based on the fact that the purchase is expensive, infrequent and risky. The buyer will try to learn more information about the product what is available at the time of purchase but will buy fairly quickly, perhaps responding to a good price or to purchase convenience. For example, carpet buying is a high - involvement decision because carpeting is expensive and self expressive, yet the buyer may consider most carpet brands in a given price range to be the same. After the purchase, the consumer might experience dissonance that stems from noticing certain disquieting features or hearing favourable things about the other brands. 3. Habitual buying behaviour :
Many products are bought by the consumer under conditions of low involvement and absence of significant brand preference. Such as salt, sugar, match etc. Consumers have little involvement in this product category. They go the store and reach for the brand. If they do not get their own brand then they shifts into the other brand. They have no strong brand loyalty. The consumers have low involvement with most low cost, frequent, less risky purchased products.
With these products, consumer behaviour does not pass the normal sequence of belief, attitude and behaviour. Consumers do not show interest to search extensively for information, evaluate characteristics and make decision on which brand to buy. Marketers of such kinds of products find it effective to use price and sales promotions to stimulate product trial. 4. Variety - seeking buying behaviour : Some buying situations are characterized by low involvement, frequent, less risky but significant brand differences. Here consumers often do a lot of brand switching. As for example, cookies. The consumer has some beliefs about cookies, chooses a brand of cookies without much evaluation and evaluates the product during consumption. Next time, the consumer may reach for another brand out of a wish for a different taste. Brand switching occurs for the sake of variety rather than dissatisfaction.
D. Post purchase behaviour.
1. Post purchase satisfaction : 2. Post purchase actions : 3. Post purchase use and disposal :
March 31, 2012
Marketing of Financial Services:Marketing Environment
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Marketing Environment
A. Demographic environment.
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Marketers are much more interested to monitor the demographic environment, because population makeup the market. 1. World population growth : The world population explosion has been a source of major concern, for two reasons. The first is the fact that certain resources needed to support this much human life ( fuel, foods and minerals ) are limited and may run out at some point. Unchecked population growth and consumption would eventually result in insufficient food supply, depletion of key material, over crowding, pollution and an overall deterioration in the quality of life. Second cause for concern is that population growth is highest in some countries and communities that can least afford it. In the developing countries, the death rate has been falling as a result of modern medicine, but birth rate remained fairly stable. Feeding, clothing and educating of their children while also providing a rising standard of living is nearly impossible in these countries. 2. Population age mix : National populations vary in their age mix. At one extreme is Mexico, a country with a very young population and rapid population growth. At the other extreme is Japan, a country with one of the worlds oldest populations. In Mexico milk, diaper, school supplies and toys would be the important products. But in Japan most of the population consume many more adult products. So, the marketers have to create separate products and services for different countries and have to choose different price, distribution and promotional strategies for them. 3. Ethnic market : Countries also vary in ethnic and racial makeup. At one extreme is Japan, where almost every one is Japanese. But on the other extreme is United States, where virtually people came from all nations. Each group has certain specific wants and buying habits. Several food, clothing and furniture companies have directed their products and promotions to one or more of these groups. 4. Education groups : The population in any society falls into five groups, illiterate, high school dropouts, high school degree, college degree and professional degrees. The marketers have to observe the size of each groups in a society and according to their size they have to design their production plan for different products and services. 5. Household patterns :
The traditional household consists of a husband, wife and children. But in some other societies we observed that their household patterns are nontraditional including single live alones, adult live togethers, single parent families, childless married couple and so on. Single or separated families needed smaller apartment, inexpensive and smaller appliances, furniture and small size food packets. So, the marketers have to consider to the household patterns of the different societies. 6. Geographical shifts in population : Population movement from one country to another or from rural to urban areas. Location makes a difference in goods and service preferences. Those who lived in large cities their most of the purchase are expensive furniture, perfumes, cloths and so on. Suburbanites buy home workshop equipment, outdoor furniture and outdoor coking equipments etc. So, the marketers have to consider to the geographic shifts in population. 7. Shift from a mass market to micro - markets :
The effect of all these changes is fragmentation of the mass market into numerous micro - markets differentiated by age, sex, ethnic background, education, geography, lifestyle and other characteristics. Each group has strong preferences and marketer has to reached the customer through increasingly targeted communication and distribution channels. Marketers are increasingly design their products and services and selected their marketing programs for specific - micro markets.
B. Economic environment.
Without the purchasing power, consumers are not able to fulfill their needs and wants properly. The available purchasing power in an economy depends on current income, price, savings, debt and credit availability. Marketers pay close attention to major trends in income and consumer spending patterns. 1. Income distribution : Nations economic condition mostly depend on the level and distribution of income and industrial structure. There are four types of industrial structures are observed in the national economy. (a) Subsistence economies : In a subsistence economy, the vast majority of people engage in simple agriculture, consume most of their output and barter the rest outputs for simple other goods and services. These economies offer few opportunities for the marketers. (b) Raw material exporting economies : These economies are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources. For example, Zaire and Saudi Arabia has copper and oil resources and they export them in the international market. These countries are good markets for extractive equipment, tools and supplies, materials handling equipments and trucks. Depending on the number of foreign residents and wealth or rich rulers and landholders, they are also a good market for western - style commodities and luxury goods. (c) Industrializing economies : In an industrializing economy, manufacturing begins initially to account for 10 percent to 20 percent of gross domestic product. Industrializing economies countries are India, Egypt, Philippines, Malaysia and so on. As manufacturing increases, the country depends more on imports of raw materials, steels and heavy machinery and less on imports of finished textiles, paper products and processed foods. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods and services.
(d) Industrial economies : Industrial economies are major exporters of manufactured goods and investment funds. They buy manufactured goods and export them to other types of economies in exchange for raw materials and semifinished goods. The large and variety of manufacturing activities of these nations and their sizable middle class make them rich markets for all sorts of goods. 2. Saving, debts and credit availability : Consumers expenditures are affected by consumer saving, debt and credit availability. Consumers saving habit increase the amount of deposits, which is helpful for banks to reduce the bank interest rate and increase the loan availability. Access to lower interest rate helps the companies to expand faster. When credit facilities are available then consumers can purchase many goods and services, otherwise these are not possible at present. Marketers must pay careful attention to major changes in income, cost of living, interest rate, savings and borrowing patterns because they can have a high impact on business, specially for companies whose products have high income and price sensitive.
C. Natural environment.
1. 2. 3. 4. Shortage of raw materials : Increased energy cost : Increased pollution levels : Changing role of governments :
D. Technological environment.
One of the most dramatic forces makes rapid changes of human life is technology. The economys growth rate is affected by the discoveries of new major innovated technologies. The marketers are monitoring the new innovation and trend of technology. 1. Accelerating pace of technological change : Many of todays common products were not available 40 years ago. People of that time were did not know personal computers, digital wristwatches, video recorders, mobile phones and fax machines. The advent of personal computers and fax machines has made it possible for people to telecommunicate the others that is, work at home instead of traveling to offices that may be takes 30 minutes or more. Some people hope that this trend of technology will reduce auto pollution, healthy society, bring the family close together and create more home centered entertainment and activities. It will also have substantial impact on shopping behaviour and marketing performance. 2. Unlimited opportunities for innovation : Scientists are working on a startling range of new technologies that will revolutionize products and production process. Some of the most exciting work is being done in solid - state electronics, biotechnology, robotics and material sciences. Researchers are working on AIDS cures, happiness pills, painkillers and nonfattening foods. They are designing efficient robots for firefighting, underwater exploration and home nursing. In addition scientists are also working on fantasy products, such as small flying cars, three - dimensional television and space colonies. The challenge in each case is not only technical but also commercial to develop affordable versions of these products. 3. Varying research and development budgets : The United States annual research and development expenditures are highest in the world, nearly 60 percent of these funds are still earmarked for defense. Japan has increased its research and development expenditures much faster than the United States and is spending mostly on nondefense related research in physics, biophysics, biochemistries, material science, geography and computer science. Many companies are content to put their money into copying competitors products and making minor feature and style improvements. So, new innovation of
technology depends upon the nature of research work and on the amount of budgets allocated for research and development works. 4. Increased regulation of technological change : As products become more complex, the public needs to be assured of their safety and security. Consequently, government agencies powers to investigate and ban potentially unsafe products have been expanded. Safety and health regulations have also increased in the area of food, automobiles, clothing, electrical appliances, medical sciences and construction. Marketers must be aware of these regulations when proposing, developing and lunching new products in the markets.
E. Political legal environment.

1. Legislation regulating business : 2. Growth of special - interest groups :
F. Social cultural - environment.

1. High persistence of core cultural values : 2. Existence of subcultures : 3. Shifts of secondary cultural values through time :
March 31, 2012
Marketing of Financial Services-Designing Competitive Strategies

BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB
Designing Competitive Strategies
Designing Competitive Strategies

We can further classify the firms by the role they play in the target market. These are :
1. 2.
Market leader Who has 40 % or more then market shares in the industry. Market challenger Who has 30 % market shares in the industry.
3. 4.
Market follower Who has 20 % market shares in the industry. Market nicher Who has 10 % or below 10 % market share in the industry.
Market leader Strategies.

A. Market leader Strategies.
(To Get Download Option Click Read More) Many industries contain one firm or a firm, which has 40 % or more than 40 % market share is called market leader. It usually leads the other firms in price changes, new product innovation or introduction, distribution coverage and promotional intensity. Some of the well known market leaders are Kodak ( photography ), Coca - Cola ( soft drink ), Mcdonald ( fast food ), Microsoft ( computer software), and so on.
1. Expanding total market : The dominant firm normally gains the most when the total market expands. In general, the market leader should look for new users, new uses and more usage of its products.
(a) New users : Every product class has the potential of attracting buyers who are unaware about the product or who are resisting it because of price or lack of certain features. A company can search for new users among the three groups. Those who might use it but do not use or buy it at present ( market penetration strategy ), those who have never use it ( new market segment strategy ) or who live elsewhere ( geographical expansion strategy ).
(b) New uses : Markets can be expanded through discovering and promoting new uses for the product. In many cases, customers deserve credit for discovering new uses. For example, Vaseline petroleum jelly started out as a lubricant in the machine shops. Over the years, users have reported many new uses for the product, including a skin ointment and hairdressing.
(c) More usage : A third market expansion strategy is to convince people to use more products per use occasion. Soft drink manufacturers convince the customer to use more soft drinks daily rather than to use on occasions.
2. Defending market share : While trying to expand total market size, the dominant firm must continuously defend its current business against rival attacks. The market leader leads in the industry in developing new product and customer services, distribution effectiveness and cost cutting. It keeps increasing its competitive strength and value of the customers. Market leaders are using different types of strategies to defending their market share. These are :
(a) Position defense : The basic defense is to build an impregnable fortification around ones territory. Coca Cola today, selling nearly half the soft drinks in the world, has acquired fruit drink companies and diversified into desalinization equipment and plastics. Although defense is very important, leaders under attack would be foolish to pull their resources into only building fortifications around their current product.
(b) Flank defense : The market leader should also erect outposts to protect a weak front or possibly serve as an invasion base for counterattack.
(c) Preemptive defense :
A more aggressive maneuver is to attack before the enemy starts its offense. A company can launch a preemptive defense in several ways. It can wage guerrilla action across the market hitting one competitor hare, another there and keep everyone off balance. Or it can try to achieve a grand market environment. It can begin sustained price attacks. Or it can send out market signals to dissuades competitors from attacking.
(d) Counteroffensive defense : Most market leaders, when attacked, will respond with a counterattack. The leader can not remain passive in the face of a competitors price cut, promotion blitz, product improvement or sales territory invasion. In a counteroffensive, the leader can meet the attacker frontally or hit his flank or lunch a pincer movement. An effective counterattack is to invade the attackers main territory so that it will have to pull back some troops to defend the territory. Another counteroffensive defense is the exercise of economic or political clout to deter the attack. The leader may try to crush a competitor by subsidizing lower prices for the vulnerable product with revenue from its more profitable products. Or the leader may prematurely announce that a product upgrade will be available to prevent customers from buying the competitors product. Or, the leader may lobby legislators to take political action that would inhibit or cripple the competition.
(e) Mobile defense : In mobile defense, the leader stretches its domain over new territories that can serve as future centers for defense and offense. Mobile defense can be classify into two categories : (i) Market broadening : Market broadening involves the company in shifting its focus from the current product to the underlying generic need. The company gets involved in research and development across the world range of technology associate with that need. Such as, thus petroleum companies sought to recast themselves into energy companies.
(ii) Market diversification : Market diversification into unrelated industries is the other alternative. When U.S. tobacco companies are well known about the movement against cigarette smoking, they were not content with position defense or even looking for substitutes for the cigarette. Instead they moved quickly into new industries, such as beer, liquor, soft drink etc.
(f) Contraction defense : Large companies sometime recognize that they can no longer defend all of their territory. The best course of action for company, then appears to be planned contraction ( also called strategic withdrawal ). Planned contraction means giving up weaker territory and reassigning resources to stronger territories.
3. Expanding market share : Market leader can improve their profitability by increasing their market share. Achieving or gaining increasing market share in the served market will not automatically improve the profitability of the company. Because the cost of gaining higher market share may far exceed its revenue value, a company should consider three factors before pursuing increased market share : The first factor is the possibility of provoking antitrust action. This rise in risk would cut down the attractiveness of pushing market share gains too far. The second factor is economic cost. The cost of gaining further market share might exceed the value. So, some market leaders have even increased profitability by selectively decreasing market share in weaker areas. The third factor is that companies might pursue the wrong marketing mix strategy in their bid for higher market share and therefore fail to increase profits. Companies that win more market share by cutting price are buying, not earning a large share and their profits may be lower.
Market challenger strategies.

B. Whom to attack by the market challenger.
A market challenger must first define its strategic objective. Most aim to increase market share. The challenger must decided whom to attack.
1. It can attack the market leader : This is a high - risk and huge investment but potentially high pay- off strategy and makes good sense if the leader the leader is not serving the market well. The alternative strategy is to out innovate the leader across the whole segment.
2. It can attack firms of its own size : It can attack the firm of its own size that are not doing the job and are under financed.
3. It can attack small local and regional firms : Several major market challenger companies grew to their present size by gobbling up small firms.
C. Attacking strategies of market challenger.

1. Frontal attack : 2. Flank attack : 3. Encirclement attack : 4. Bypass attack : 5. Guerilla attack :
D. Choosing a specific attack strategy by the marketer challenger.

1. Price discount : 2. Cheaper goods : 3. Prestige goods : 4. Product proliferation : 5. Product innovation : 6. Improved services : 7. Distribution innovation : 8. Manufacturing cost reduction : 9. Intensive advertising promotion :
E. Market follower strategies

1. Counterfeiter : The counterfeiter duplicate the market leaders product and package and sells it on the black market or through disreputable dealers. 2. Cloner The cloner emulates the market leaders products, name, brand and packaging with slight variations.
3. Imitator :
The imitator copies some things from the market leader but maintains differentiation in terms of packaging, advertising, pricing and so on. The
market leader does not mind the imitator as long as the imitator does not attack the market leader aggressively.
4. Adapter : The adapter takes the market leaders products and adapts or improves them. The adapter may choose to sell his product to different markets. But often the adapter grows into future market challenger.
Market Nicher Strategies.

F. Specialist roles are open to the market nichers :
01. End - user specialist : 02. Vertical - level specialist : 03. Customer - size specialist : 04. Specific - customer specialist : 05. Geographic specialist : 06. Product or product line - specialist : 07. Product - feature specialist : 08. Job - shop specialist : 09. Quality - price specialist : 10. Service specialist : 11. Channel specialist : March 27, 2012
Marketing of Financial Services: Introduction to Marketing
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Introduction to Marketing
The Scope of Marketing
In twenty first century marketing is not related with the production and distribution of goods and services. The scope of marketing is so much expanded that it has play vital role to improve our standard
(To Get Download Option Click Read More)

of life and at the same time help to create health and wealth society. Following areas or items where marketing principles, policies and strategies are applied and on the other hand these are widely used in marketing activities.
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1. Goods : Physical goods constitute the bulk of most countrys production and marketing effort. Physical goods can be food, car, television, clothing, housing and so on. Most of the marketing activities are closely related with goods. Without goods transportation, warehousing, grading and standardization activities can not be performed. 2. Services : Services play a vital role in the modern economy. As economies advance, developed nations are give more emphasis on production of services. Services include the work of airlines, hotels, care rental firms, barbers and beauticians, maintenance and repair people and service of accountants, lawyers, engineers, doctors, software programmers and management consultants. Many market offering are consist of a mix of goods and services. Such as fast food restaurant, where the customers are consume both good and service at a time. Pure service would be a psychiatrist listening to a patient or legal advice of lawyer. 3. Experiences : Marketers can create, stage and marketed experience. As for example, Walt Disney Worlds Magic Kingdom, where he create a visiting fairy kingdom, stages pirate ship, or haunted house and marketed different experiences for the customers. Another example, customers can gather experience by spending one week at a baseball camp playing with some retired baseball great players. 4. Events : Marketers can marketed events as goods and services. Marketers promote time - base events, such as the Olympics, company anniversaries, major trade shows, sports events. There is a whole profession of meetings planners who will work out the details of an event and stages it to come off perfectly. 5. Persons : Celebrity marketing has become a major business. A politician can marketed himself through campaigning political mandate, personal image or success. Today every major film star has an agent, a personal manager and ties to a public relations agency. Artists, musicians, doctors, high level lawyer and other professionals are drawing help from celebrity marketers. 6. Places : Place marketing can be expressed in two different ways, one is places are used or play a vital role in marketing activities. Such as historical cities, regions or sea beach or natural beautiful areas to attract tourists. Other is places are used like as goods. Such as real estate or apartment marketing. 7. Properties : Properties are intangible rights of ownership of either real property or financial property. Such as real estate, apartment and stocks, bonds etc. Properties are bought and sold, so it requires marketing effort. Real estate agents work for property or apartment owners or seekers to sell or buy residential or commercial real estate or apartment. Investment companies and banks or their agents are involved in marketing of securities to both institutional and individual investors. 8. Organizations : Organizations are actively works to build a strong, favorable image in the mind of their public or customers. Universities, colleges, museums, NGOs ( non government organization ) and clubs all lay plans to boost their public image to compete more successfully for audiences and funds. 9. Information : Information can be produced and marketed as a product. Universities, colleges, schools and research organizations are collect data and facts and develop or produce information and thereafter distributed to parents, students, manufacturing organization and communities at a price. We buy CDs and visit the internet for information. At present in the knowledge society production, packaging and distribution of information is one of the major industries. 10. Ideas : Every market offering includes a basic idea at its core. The buyer of a television set is really buy recreation and prestige. Products and services are the platforms for delivering some ideas or benefits. Marketers search hard for core need of their customers and they are trying to satisfying them. Many organization promote ideas to create better environment in the society. As for example, slogan of planted trees and save the environment .
Demand States and Marketing Tasks

Different type of demand are exist in the market for different type of products and services, which are discuss below. Marketer observed the demand in the market and take necessary action to change the nature of demand or adjust it with the help of different type of marketing tools and techniques. 1. Negative demand : A market is in state of negative demand if a major part of the market (customer) dislikes the product and may even may pay a price to avoid it. Such as vaccination, dental work, air travel etc. The marketing task is to analyze why the market dislikes the product and whether a marketing program consisting of product redesign, lower prices and more positive promotion can change beliefs and attitudes. 2. No demand : Target customers may be unaware of or not interested in the product. College students may not be interested in foreign language course. A new service holder may not be interest to take a life insurance policy. The marketing task is to find ways to connect the benefits of the product with the persons natural needs and interests. 3. Latent demand : Many customers may have a strong need that cannot be satisfied by any existing product. There is a strong latent demand for harmless cigarettes and more fuel efficient cars. The marketing task is to measure the size of the potential market and take necessary research program and develop products and services to satisfy the demand if that are profitable. 4. Declining demand : Every organization, sooner or later face declining demand for one or more of its products. Such demand for gramophone, radio, black and white television etc. The marketer must analyze the cause of the decline and determine whether demand can be restimulated by new target markets, by changing product features, by price reduction or by more efficient and effective communication.
5. Irregular demand : Many organizations face demand that varies on a seasonal, daily, or even hourly basis, causing problems of idle or overworked capacity. Such as road transport city buses are idle during off - peak hours and insufficient during peak hours. The marketing task is to find ways to alter the pattern of demand through flexible pricing, promotion and other incentives. 6. Full demand : Organizations often face full demand when they are pleased with their volume of business. Such as mobile phone companies faces full demand situation in Bangladesh. The marketing task is to maintain the current level of demand, so that they can face the changing customer preferences and increasing competition. The organization must maintain or improve its quality and continually measure customer satisfaction. 7. Overfull demand : Some organization face a full demand level that is higher then they can expect or capable or want to handle. At present in Bangladesh L .P. gas companies enjoying overfull demand. The marketing task is to finding ways to reduce demand temporarily or permanently. In this situation marketers generally take the steps to raising price and reduce promotional activities and services. 8. Unwholesome demand : Unwholesome demand is the demand of that products and services which are harmful to the society. Organizations give their time, money, resource, effort and energy to discourage the consumption of these type of products and services. Such as unselling campaigns have been conducted against cigarettes, alcohol, hard drugs, X - rated movies, large families etc. The marketing task is to use negative messages and information ( harmful sides of the products and services ) in promotional activities, increase the price and reduce the availability of that products and services.
Types of Markets
A market is a set of all present and potential buyers. We can classify the market according to the nature, objectives, behaviour of the market, which are discussed below. 1. Consumer markets : This market is constitute by the consumer who buys goods and services for their ultimate consumption. They do not process it to produce another goods and services or resell it to another customer. Their buying behaviour is mostly emotional and they are not well informed about goods and services. Producer or marketer requires to getting a clear sense about their target customers. Most of the products strength depends on developing a superior product and packaging and backing it with continuous advertising and reliable service. Consumer marketers decide on the features, quality level, distribution coverage and promotional activities that will help their product or service to achieve the best position in the market. 2. Business markets : This market is constitute by the business men or professionals who buys goods and services to produce another goods and services or resell it to another customer. They are well - trained and well - informed professional buyers who have the skill to evaluate the competitive offerings. Business buyer purchase products to make profit. Their buying behaviour is purely rational. Business marketers must demonstrate how their products will help business customer to achieve their profit goals. In this market advertise has very small role, but stronger role is played by sales force, price and companys reputation for reliability and quality. 3. Global markets : Companies selling their goods and services in the global market place and face additional decision and challenges. Marketer must be decide which countries to enters, how to enter each country, how to adapt their product and service features to each countries, how to price their product in different countries. In the global market, marketer must have to take other decisions, such as how to adapt their communication to fit the cultural practices of each country. These decisions must be made on different legal system, different styles of negotiation, different type of requirements for buying, owning and disposing of property and so on. 4. Non - profit and governmental markets : Companies selling their goods to non - profit organizations such as churches, Universities, Education boards, charitable organizations or government agencies. In this market, company must be careful to set price for their goods, because these organizations have limited purchasing power. Lower prices can be affect the features and quality of the goods. In this market, different type of formalities are needed to make sales.
Core Marketing Concepts

Marketing have different type of core concepts, which are helpful to understood marketing as a modern social science. These core concepts are discussed below. 1. Target markets and segmentation : A marketer can not satisfy all type of customers in a market at a time. Not everyone likes same soft drink, same dress, restaurant, automobile, movie etc. Customer likeness or dislikes of goods and services are depends upon the age, sex, income, culture, education, status and so on. Therefore, marketer segmented total market according to age, income, culture, education, status of the customers. Then firm decides which segment is more profitable and which segment is easy to serve or to satisfy. 2. Marketers and prospects : A marketer is someone who seeking a response ( attention, a purchase, a vote, a donation ) from another party. Where another party is called the prospects. If two parties are seeking to sell something to each other, then we called them both marketers. 3. Needs , wants and demands : The marketer must try to understand the needs, wants and demand of the target market. Needs describe the basic human requirements. People need food, air, water, clothing and shelter to survive. People also have some strong needs for recreation, education, health care, justices and entertainment. A marketer can not create needs for his market. These needs become wants when they are directed to specific objects that might satisfy the need. A persons needs can be food but his wants can be rice, brad or fruits. Demands are wants for specific products backed by ability to pay. Three factors are important to create demand for a product. First, desire to buy a specific product, second, ability to buy ( purchasing power ) and third, willingness to pay. Demand can be created by the marketers. 4. Product or offering : People satisfy their needs and wants through products. A product is any offering that can satisfy a need or want of the customers. Product is the most important factor in marketing for any type of manufacturing and business organizations. Marketers chose their marketing policies and strategies on the basis of
the product nature, position and stage of product life cycle. Major types of basic offerings of business or social organizations are goods, services, experiences, events, persons, places, properties, organizations, information and ideas. 5. Value and satisfaction : The product or offering will be successful if it is able to delivers value and satisfaction to the target buyer. The value is a ratio between what the customer gets ( benefits ) and what they gives ( cost ). The buyer chooses different offerings on the basis of which is perceived to deliver the most value. The benefits include functional benefits and emotional benefits. The costs include monetary cost, time cost, energy cost and psychic costs. The marketer can increase the value of the customer offering in several ways. Raise benefits, reduce costs, raise benefits and reduce costs, raise benefits by more than the raise in costs, Lower benefits by less than the reduction in costs. 6. Exchange and transactions : Exchange is the core concept of marketing, involves obtaining a desired product from someone by offering something in return. Exchange is only one of four ways in which a person can obtain a product. The person can self - produce the product and service, as when a person hunts, fishes, produce cloths or gathers fruits. The person can use force to get a product, as in a holdup or burglary. The person can beg, as happens when a homeless person asks for foods. Five conditions are more essential to create exchange. these are. (a) There is at least two parties. (b) Each party has something that may be valuable to the other party. (c) Each party is capable to communicate and delivery. (d) Each party is free to accept it or reject the exchange offer. (e) Each party believes that it is appropriate or desirable to deal with the other party. Exchange is a process rather than an event. Two parties are engaged in exchange if they are negotiating, trying to arrive at mutually agreeable terms. A transaction is a trade of values between two or more parties. A transaction involves several dimensions, at least two things of value, conditions of agreement, a time of agreement, and a place of agreement. 7. Relationship and networks : Relationship marketing has the aim of building long term mutually satisfying relations with key parties customers, suppliers, distributors in order to earn and retain their long term performance and business. Marketers accomplish this by promising and delivering high quality products and services at fair price to the other parties over time. Relationship marketing builds strong economic, technical and social ties among the parties. It helps to cut down transaction costs and time. The ultimate outcome of relationship marketing is the building of a unique company asset called marketing network. A marketing network consists of the company and its supporting stakeholders, such as customers, employees, suppliers, distributors, retailers, adverting agencies, university scientists and others with whom it has built mutually profitable business relationships. 8. Marketing channels : To reach a target market, the marketer uses three kinds of marketing channels. The marketer uses communication channel to deliver and receive message from target buyers. This includes newspapers, magazines, radio, television, mail, telephone, billboards, posters, CDs, audiotapes and internet. The marketer uses distribution channels to display or deliver the physical product or services to the buyer or user. This includes warehouse, transportation vehicles, distributors, wholesalers and retailers. The marketer also uses selling channels to effect transactions with potential buyers. Selling channels include not only the distributors and retailers but also the banks and insurance companies that facilitate transactions. 9. Supply chain : Marketing channels connect the marketer to the target buyers, the supply chain describe a longer channel stretching from raw materials to components to final products that are carried to final buyers. The supply chain represents a value delivery system. Each company captures only a certain percentage of the total value generated by the supply chain. 10. Competition : Competition includes all actual and potential rival offerings and substitutes that a buyer might consider. Competition can be classify into four categories. (a) Brand competition : A company sees its competitors as other companies offering a similar product and services to the same customers at similar price. (b) Industry competition : A company sees its competitors as all companies making the same product or class of products. (c) From competition : A company sees its competitors as all companies manufacturing products that supply the same service. (d) Generic competition : A company sees its competitors as all companies that compete for the same customers. 11. Marketing environment : The marketing environment consists of task environment and broad environment. The task environment includes the immediate actors involved in producing, distributing and promoting the offering. The main actors are the company, suppliers, distributors, dealers, agents, brokers, manufacturer representatives, marketing research agencies, advertising agencies, banks, insurance companies, transportation and telecommunication companies and the target consumers. The broad environment consists of demographic environment, economic environment, natural environment, technological environment, political environment, legal environment, social environment and cultural environment. These environments contain forces that can have a major impact on the actors in the task environment.
Marketing Philosophy
Marketing management is the conscious effort to achieve desired exchange outcomes with target market. But what philosophy should guide a companys marketing efforts ? What relative weights should be given to the interests of the organization, the customers and society ? So, marketing activities should be carried out under a well thought philosophy of efficiency, low cost and mass distribution. There are five competing concepts under which organizations conduct marketing activities. These are discussed below. 1. Production concept : The production concept is one of the oldest concept in business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production oriented businesses concentrate on achieving high production efficiency, low costs and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This concept hugely used in the developing countries. It is also used when a company wants to expand the market. 2. Product concept : The product concept holds that consumers will favour those products that offer the most quality, preference or innovative features. In this concept price of the product is not an important factor. Managers in these organization focus on making superior products and improving them over time. They assume that buyers admire well made products and can appraise quality and preference. Company first try to produce a better quality product with the help of their
engineers but they do not consider the needs and wants of the consumer. Here company think that if they are able to product a better quality product then they can sell it easily in the market. 3. Selling concept : The selling concept holds that normally consumers are not interest to buy enough of the companys product, until they are forced. The company must therefore, undertake an aggressive selling and promotional effort. This concept assume that typically consumers are not buy much more and must be stimulated to buy more. It is also assume that company has an efficient and effective selling and promotional tools to stimulate more buying. The selling concept is practiced most aggressively with unsought goods, that buyers normally do not think to buy it. Such as insurance, encyclopedias. These industries have preferred various sales techniques to locate prospects and disclose the product benefits to the prospects. The selling concept is also practiced in the non - profit organizations to collect funds and political parties. Most firm practice the selling concept when they have over capacity. Their aim is to sell what they make rather than what market wants. 4. Marketing concept or consumer oriented concept : The marketing concept or consumer oriented concept holds that the key to achieving its organizational goals consist of the company being more effective than competitors in creating, delivering and communicating customer value to its chosen target market. Marketing concept rests on four pillars. These are discussed below. (a) Target market : First company segmented total market according to some effective basis. Then they choose a target market, which market is more profitable and at the same time it is easy to serve. Company do best when they choose their target market carefully and prepare effective marketing programs. (b) Customer needs : A company can define its target market but fall to correctly understand the customers needs. Understanding customer needs and wants is not always simple. Some customers have needs which they are not fully conscious, or they can not articulate these needs, or they use some words that requires some interpretations. So, it is essential to find out the actual needs and wants of the customers. (c) Integrated marketing : When all the companys departments works together to serve the customers interest, the result is integrated marketing. Integrated marketing takes place on two levels. First, the various marketing functions - sales force, advertising, customer service, product management, marketing research - must together. Second, marketing must be embraced by the other departments, they must also have to think about customer. (d) Profitability : The ultimate purpose of the marketing concept is to help organizations to achieve their objectives. In the case of private firms, the major objective is to earn profit. In the case of non - profit or public organizations, it is surviving and attracting enough funds to perform useful work. 5. Societal marketing concept : The societal marketing concept holds that the organizations task is to determine the needs, wants and interests of the target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumers and the societys well being. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. Here company must try to make a balance among company profit, customer want satisfaction and public interest. At the same time company try to build up a health and wealth society so that company can able to survive in long run.
Difference between selling concept and marketing concept

Starting point Factory Target market March 24, 2012 Focus Products Customer needs Means Selling and promoting Selling concept Integrated marketing Marketing concept Ends Profit through sales volume Profit through customer satisfaction
Marketing of Financial Services: Industry Concept of Competition
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Industry Concept of Competition
A. Definition of Industry.
An industry is a group of firms that offer a product or class of products that are close substitute of each other. (To Get Download Option Click Read More)
B. Classification of Industry.
Industries can be classified according to competition among themselves are given bellow. 1. Number of sellers and degree of differentiation :
An industry can be specify by the number of sellers and whether the product is homogeneous or highly differentiated in nature. These characteristics give rise to four industry structure types. (a) Pure monopoly : Only one firm provides a certain product and service in a certain country or area. An unregulated monopolist might charge high price, do little or no advertising and offer nominal service. If partial substitutes are available and there is some danger of competition, the monopolist might invest more service and technology. (b) Oligopoly : A small number of large firms produce products that range from highly differentiated to standardized. Pure oligopoly consists of a few companies producing essentially that the same commodity ( oil, steel and mobile phone in Bangladesh ). Such companies would find it hard to charge anything more than the going price. If competitors match on services, the only way to gain competitive advantages is through lower cost. Differentiated oligopoly consists of a few companies products ( autos, cameras ) partially differentiated along lines of quality, features, styling, or services. (c) Monopolistic competition : Many companies are able to differentiate their offers in whole or part (restaurant, beauty shops). Competitors focus on market segmentations, where they can meet consumers needs in a superior way and charge a price premium. (d) Pure competition : Many competitors offer same product and service ( stock market, daily essential food commodity ) to the consumer. Because there is on basis or way for differentiation, competitors prices will be the same. No competitor are not interested to advertise there products or services unless advertising can able to create psychological differentiation ( cigarettes, beer ). 2. Entry, Mobility, Exit Barriers : Industries differ greatly in case of entry. It is easy to open a new restaurant but difficult to enter in the aircraft industry. Major entry barrier includes high capital requirements, economy of scale, patents and licensing requirement, scare locations, raw materials, distributors and reputation requirements. Even after a firm enters in an industry, it might face mobility barriers when it tries to enter more attractive market segments. Firms often face exit barriers, such as legal or moral obligations to customers, creators, and employees, government restrictions, low assets salvage value due to over specialization or obsolescence, lack of alternative opportunities, high vertical integration and emotional barriers. Many firm stay in the industry as long as they can able to cover their variable costs and some or all of their fixed costs. 3. Cost structure : Each industry has a certain cost burden that shapes much of its strategic conduct. For example, steel industry has heavy manufacturing and raw material costs, but toy industry has heavy distribution and marketing costs. So, marketers can easily classify the industries on the basis on the cost structure. 4. Degree of vertical integration : Companies can get advantages through backward and forward integration. Major oil producers carry on oil exploration, oil drilling, oil refining, chemical manufacture, and service station operations. Vertical integration often lowers costs and the company gains a larger share
of value added stream. It has some disadvantages, such as high costs in certain parts of the value chain and a certain lack of flexibility. 5. Degree of globalization : Some industries are highly local ( restaurant, beauty shop, small size manufacturing organization ), others are global ( oil, aircraft, camera, computer ). Companies in global industries need to compete on a global basis if they are to achieve economies of scale and keep up with the largest advances in technology.
March 18, 2012
Marketing of Financial Services: Sales Promotion
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Sales Promotion
Q. Define sales promotion? What is the nature, role & importance of sales promotion? OR What is sales promotion? Discuss the nature, role & importance of sales promotion. Ans.: Sales promotion is a key factor & strategy for marketers within the promotional mix. Sales promotion refers to many kinds of incentives & techniques directed towards consumers & traders with the intention to produce immediate or short term effects. Sales promotion helps in stimulating trial or purchase by final customers or others in the channel. A marketer can increase the value of its Product/ Service by offering an extra incentive to purchase a Product/ Service or brand. A few definitions are quoted below:1. American Marketing Association - Sales promotions is media & non media marketing pressure applied for a predetermined, limited period of time in order to stimulate trial & impulse purchases, increase consumer demand or improve Product/ Service quality. 2. Council of Sales Promotion Agencies sales promotion is a marketing discipline that utilizes a variety of incentives techniques to structure sales related programs targeted to consumers/trade/ and or sales level, that generate a specific measurable action or response for a Product/ Service/service. 3. Institute of sales promotion, U.K. Sales promotion comprises that range of techniques used to attain sales/marketing objectives a cost effective manner adding value to a Product/ Service or service either to intermediate or end users, normally but not exclusively within a definite time period. Sales promotions have 3 distinct characteristics (a) Communication They gain attention & usually provide information that may lead the consumer to the Product/ Service. (b) Incentive They give certain concession, inducement or contribution that gives value to the consumer. (c) Invitation They invite a distinct invitation to engage in the tre. Nature of sales promotion:1. Irregular / non recurring activity- Sales promotion is an irregular & non recurring activity to increase the sales & this technique is used for specific situations only such as decline in demand, fall in profit, acute competition in the market or during the introduction of new Product/ Service in the market. 2. Target- The target for producers sales promotion may be middleman, end users, household or business users or the producers own sales force. Middleman sales promotion at their sales people or prospects further down the channel of distribution. 3. Motivation & extra incentive- Sales promotion involves some type of incentives that offer a reason to buy. This incentive is usually the key element in a promotional program & is an effort by which consumers, traders and sales force are motivated towards maximum sales. 4. Acceleration tool- sales promotion is designed to speed up the selling process & maximize sales volume. 5. Immediate impact- Sales promotion can be implemented quickly & gets sales results sooner than advertising sales promotions offers an incentive to buy now. 6. Objective- The objective of sales promotion is to establish a link & coordination between the activities like advertising, personal selling, publicity etc. sales promotion bridges a gap between advertising and personal selling.
7. Non media activity- Sales promotion is referred to as a non media activity as sales promotion is differentiated from advertising & publicity & also includes them as part of the overall promotions mix. 8. Strategic role- Because of the immediate nature of the impact, sales promotion have been thought of as merely this view is changing and the strategic role of sales promotion and their integral role in the promotional mix are being recognized. 9. Planned activity- The fact that sales promotion can be effective throughout the life of a brand shows their strategic role. Sales promotion activities should be planned well to stimulate sale. 10. Versatile- Sales promotion is extremely versatile. The different forms of sales promotion are capable of being used with various groups & designed to achieve different effects. Sales promotion can be useful throughout the Product/ Service life cycle. 11. Means of marketing communication- It is an important means of communication by which views & ideas of consumers about the Product/ Services & services are exchanged with the producers regularly. 12. An element of promotion mix- Sales promotion is one of the important elements of promotion mix, other than advertising, personal selling and publicity. 13. Universal activity- It is a universal activity adopted by all the economies of the world in their sales efforts. Role of sales promotion:1. To popularize goods and services of the producer among the potential consumers & to motivate them towards larger purchases. 2. To motivate the existing customers for maximum purchase. 3. To maintain the sales up to normal level even during seasonal vacations & during the declining stage of PLC. 4. To increase goodwill of the firm. 5. To educate customers/dealers & salesmen about the techniques of sales promotion. 6. To simplify the efforts of sales force & motivate them for larger purchase. 7. To stimulate maximum sales on special occasions such as Diwali, religious festivals & other such occasions. 8. To search for a new market & to introduce new Product/ Services in to the market. 9. To counteract competition. 10. To facilitate coordination & proper link between advertising and personal selling. 11. To promote larger sales in certain specified segments of market. 12. To present a counter promotional program against the competitoBDT 13. To develop patronage habits among customeBDT 14. To prove the Product/ Service better in quality & useBDT Importance of sales promotion:Sales promotion is an important component of the marketing program . It can be a specific tool of the promotion. Quality sales promotion provides advantages to the various groups described below:1. Importance to consumers 2. Importance to produceBDT 3. Importance to middlemen. 4. Importance to society & nation. 1. Importance to consumers:(i) Availability of new Product/ Services- It is easy to sell new Product/ Services with the help of sales promotional tools. Hence the producers are encouraged to bring new Product/ Services. (ii) Various rebates & free discounts- Sales promotions offers various incentives like rebates & free discounts, free samples which helps to stimulates sales & purchase. (iii) Thrill in life- The various incentives contents samples, demonstrations, fair and exhibitions create thrill and joy in consumers life and the relish these beneficial offeBDT (iv) Low price- Sales promotion increases sales volume and reduce the unit cost of Product/ Serviceion & thus the prices reduce & it benefits consumeBDT (v) Increase knowledge- Sales promotion increases the knowledge of the consumers with regard to the uses, operation & maintenance of the Product/ Service. (vi) Provide higher standard of living. (vii) Buying confidence- Sales promotion tools provide the consumers an opportunity to understand the Product/ Service. This creates a buying confidence among consumeBDT They may take better buying decisions which ultimately increases their satisfaction level.
(viii) Minimize exploitation- The promotional plan creates a better knowledge about the Product/ Services, their uses & quality. As a result, the seller cant exploit the consumeBDT 2. Importance to producers:(i) Increase in sales- Sales promotion attract consumers & stimulate them to make larger purchaser. (ii) Improve effectiveness of Media Activities- the sales promotions plans make the advertisement & other media activities more effective to achieve the sales largest these give pulling power to ads. (iii) Help personal selling- sales promotions supports personal selling process the salespersons can use demonstrations , distributions to free samples , contest methods to push the sales. Sales promotion aimed at companys own sales force might motivate salesmen to get new costumers, selling a Product/ Service. (iv) Able to capture new market. (v) Increase regular sales & seasonal Product/ Services. (vi) It helps in increasing goodwill of the firm. (vii) The various promotional incentives offered to the dealers help to achieve cooperation from them to sale the Product/ Services & to maintain maximum stock with them. (viii) It is an effective step to face the competition. (ix) It helps in increasing the demand of new Product/ Services. (x) It helps in maintaining existing customeBDT (xi) It creates a trusting attitude among customeBDT Free sample & functional demonstrations creates a faith in the use of merchandise which results in longer sales. Importance to middlemen / dealers:(i) Facilitates longer sale. (ii) By operating various sales promotional plans, manufacturers provide various type of helps such as rebates, trade discounts, gifts, rewards to dealers & reselleBDT (iii) A direct relationship between the dealers & the customers are established through the sales promotion techniques which will continue for a long term. (iv) As the cost of each deal is reduced the profits of dealers are also increased. Q. What are the functions performed by a sales promotion department? Ans. The success of modern business largely depends on the functions of sales promotion department. Sales promotion department becomes more important as there exist a buyers market in place of a sellers market. The functions & responsibilities of sales promotions department have been described by Alfered Ghoss & Haughten in 3 ways: To establish coordination with other departments. 1. Assisting functions towards dealeBDT 2. To motivate the customeBDT Usually the sales promotions department undertakes the following functions:1. Planning for sales promotion company-The primary function of the sales promotions department is to make long term & short term planning for undertaking promotional programs. This is done by evaluating the various factors such as market condition , level of competition , demand & supply situation , advertising , personal selling , etc. 2. Assistance to top executives- The sales promotions department provides various information to top executives & give assistance in related matters for decision making. 3. Coordination & liaison with other departments- The sales promotion department regularly coordinates with other departments such as advertising, sales force management, packaging, publicity etc. The value promotion is coordinated in view of the travelling schedule of salesmen, sales presentation etc. Sales promotion department is also associated with Product/ Serviceion, finance, training departments of the organization & established coordination with these departments from time to time. 4. Sales promotion research- In order to make sales promotion program more effective , the S.P. department undertakes surveys & evaluates the information gathered to know about the changing values, traditions, culture , consumers behavior & public opinions. 5. Execution of sales promotion program -The sales promotion department also execute programs design for consumers, dealers & the various advertising & promotional agencies, PR officers, distributers & exchange ideas with them. It organizes sales exhibitions, trade fairs, contests etc, from time to time. 6. Provides training to the sales lesson -The sales promotion department trains the salesmen about the company , its Product/ Services , promotional incentives being gives to buyeBDT The department also gives introduction about companys policies & plans. Customers-salesmen relationship. 7. Evaluation of sales promotion - sales promotion department evaluates the planned promotional program & with the help of these promotional plans, data are collected & it is analyzed to find out the effectiveness of the program. Consumes survey, consumer panels gives a clear picture of the various sales promotional tools. 8. Assisting dealers / middlemen to make advertising more effective-dealers also deal with advertising of the various Product/ Services. The sales promotion department helps in producing training to the salesmen , to promote dealer interests etc. The sales promotion department also decides on with best advertising messages, copies & media for their Product/ Services. 9. Coordination between advertising & personal selling.
Q. What is distinction with advertising & personal selling? OR Discuss the points which make sales promotion distance with that of Advertising & personal selling. Ans. Sales promotion can be differentiated from advertising in the following ways:1. New media activity:- Sales promotions a non-media or below the line activity & advertising is the media related activity. 2. Limited time period:-Advertising is for long term effect & is for longer periods, whereas sales promotion is for a limited time period only. 3. Easy evaluation:-The impact of sales promotion can be easily measured in comparison to advertising. 4. Faces on immediate purchase:- Advertising is designed to have awareness , interest & preference building effects over a long run. Sales promotion simulates quick & immediate purchase or sales promotion offers a reason to buy now. 5. Creating action:-Advertisement builds long term brand awareness & sales promotion is used for creating action. Distinction of sales promotion & personal selling. 1. Role:- Sales promotion helps to increase the effectiveness of personal selling & personal selling creates desire for a Product/ Service thereby effecting sales . 2. Motivation:-Sales promotion provides physical motivation to customers personal selling provides physical and emotional motivation to customers 3. Personal presence:-Personal presence of salesmen is not necessary in sales promotion whereas in personal selling salesmen is required for selling. 4. Media:-Sales promotion can be presented through any media like vocal, written or audio visual personal selling it can be presented through vocal media only. 5. Compumentary function:- Sales promotion is complimentary to personal selling whereas personal selling does not complement to the sales promotion program. 6. Continuity:- Sales promotion is not used as a securing activity whereas personal selling is a routure activity which regularly operates. 7. Orientation:- Sales promotion is oriented largely towards the firms or its Product/ Service , personal selling in customer oriented. 8. Object:-The objective of sales promotion is to feel a gap between advertising & personal selling & the objective of personal selling is to solve the problems of customers & to get more sales Q. What are the roles of sales promotion in an company or shortages? Ans. There are three types of world economy:- developed, developing & under developed (Shortage economy) . In an economy of shortages, the availability of goods & resources are shorter or lesser than their demands. Limitations of a shortage economy1. 2. 3. 4. 5. 6. 7. Under developed in economic aspects. Natural resources remain untapped. Restricted development of industrial activities. Lower standard of living of people . Shorter supply of Product/ Service & resources. Slow growth of capital formation. Limited opportunity for employment.
Economists say that development of economy is possible only when there is increased sale. Therefore sales promotion is considered to be tool for stimulating the sales. Also, in a shortage economy, sellers market is dominant whereby seller takes the advantage of the situation & creates situations of unfair trade practice. Thus, sales promotion can stop this situation of unfair trade practice & thus the economy will grow through the Product/ Serviceion of new items copy setting Product/ Services of new industries & industrial units & this way the wheel of economy development might move faster & can create a surplus situation in an economy of shortage. Q. What are the commonly used tools & techniques of dealer? Promotions? OR What are the different sales promotional tools useful for traders? Ans. These promotional tools are targeted to marketing intermediaries such as wholesalers, retailers, distributers or agents who stock the manufactures Product/ Services for sale sales promotion directed at the trade helps push a Product/ Service into the distribution channel until it reaches customeBDT Here are the most common types of trade promotion tools:1) Point of purchase displays:- A manufacturer designed display distributed to retailers who use it to draw the customers attention to Product/ Service promotions is called as pop displays. Pop includes passion racks, displaycartoons, banners, signs, price cards, mechanical Product/ Service, dispenses etc. 2) Incentives: - Incentives to members of trade include awards in the form of travel, cash bonus, gifts etc. another form of trade incentive is referred to as push money. Push money is carried out through a program in which retail sales people are offered a monetary reward for featuring a marketers brand with shoppe BDT 3) Trade allowance: - Trade allowance is probably a discount or deal offered to retailers or whole sales, to encourage them to stock display the manufacturers Product/ Service Types of allowances offered(i)Advertising allowance: - In this method, actual expenses or certain percentage to purchases made, are not met by the producer. Instead an allowance is paid to the dealer toward advertising expenses. (ii) Promotional allowance: - Certain items which helps in advertising and publicity are distributed to retailers free of cost.Such novelties include pens, calendars, paper weights, bill books, bags, diaries, memo pads etc. (iii)Display allowance:- The producers who dont provide display material to dealers, provide them with display allowances.
(iv)Buying allowance/Price off allowance:- The price of allowance is given on purchase made during a specified period of time directly from the producer. This encourage larger purchase from the producer. (v) Brand deal allowance:- Such allowances are given to those middlemen who deal exclusively with a single brand. (vi)Buy back allowance:- It is a sum of money given to the reseller for each unit brought after an initial deal is over. 4) Sales training program:- Another form of dealer promotional tool is sales training program. Salesmen at the retail level need to be trained about the features of the Product/ Service, benefits, advantages of different models/brands etc. cosmetics, appliances, computers, electronic Product/ Services are examples for which consumer rely on trained sales staff. 5) Trade shows:- Trade shows are certain activities designed where manufacturer can display their Product/ Services to current as well as prospective buyer BDT They are attended by retailers to distributors and involve demonstrating Product/ Services, identifying prospectus and gathering customer BDT Trade shows are particularly valuable when a new Product/ Service is introducing in to the market many companies use trade shows to entertain key customers and to develop and maintain relationship with them. 6) Cooperative advertising:- In this method the dealer and the producer both jointly share the expenses of advertising. Either the producer may bear a fix amount of the advertising expenses or certain percentage to the purchase made by the dealer in a year. 7) Free merchandise:- Free merchandise is sometimes offered to resellers who purchase stated quantities of the same or different Product/ Services. 8) Sales contests:- Sales contests are organized for dealers also on the basis of highest sales achieved by dealers during a specific time period. Prizes, certificates are issued to such dealers and such contest hence motivates the dealer for longer purchases. 9) Retailer kits:- Materials that support retailers selling efforts are retailer kits. The kits contain supporting information such as detailed Product/ Service specification, ad slicks- print ads that are ready to be sent to the local print media. (10) Advertising and display aids:- Some of the aid are (i) Local news paper advertising:- Advertisements in local news paper specifying name, contact no. and address of dealers, helps the people to know about the dealers in town. (ii) Direct mail advertising:- In this the producer sends various advertising and publicity material to dealer by mail. This includes reply cards, calendars, diaries, folders, house magazines, order book, hand bills etc. (iii)Outdoor advertising:- Producers provide banners, sign boards, posters, bill boards, holdings to dealers at their own cost. (iv)Organizing fashion shows:- Some companies organize fashion shows in big cities to promote their Product/ Services. This is also an encouragement to Deale BDT 11) Sales assistance:(i) Building up sales plan: - Producers extend help and express knowledge to wholesalers and retailers in building up sales plan, formulating strategies and sales programs. This helps the dealers to increase their selling skills. (ii) Sales meetings:- Producers organize sales meeting for distributors to provide knowledge about new Product/ Services, sales policies and sales plan. (iii)Buy back guarantee:- Producers sometimes gives buy back guarantee to dealers for the goods that have not been sold by them. Thus goods are sold to dealers on sell or return condition. (iv)Special trade terms:- Middlemen/Dealers are encouraged by special trade terms which may be related to price, payment, credit, allowance, financial assistance balance of stock etc. (v) Special services:- Producers also offer special services to dealers which include packaging, categorization of Product/ Services, dealer listing. (vi)Credit facilities: - Producers provide short term credit facility to dealers to motivate them to have maximum stock of the goods. 12) Management assistance:- It includes (i) Providing knowledge about management techniques. (ii) Advice towards policy matteBDT (iii)Guidance in setting up internal organization. (iv)Sales management process. Q. What are the different tools of sales promotion for consumer promotion? Ans. This sales promotion is aimed at final consumer or use BDT Consumer sales promotion used by retailers are aimed at attracting customers to specific locations. The consumer promotion tools are1) Sample-Samples are offer of a trial amount of a Product/ Service generally 84% consumer package goods marketers use sampling as part of their promotion strategy. By offering free samples, a company gains entry into that market, soaps, detergents, toothpastes, shampoos, conditioners are examples of few Product/ Services that are normally popularized through free samples. Free samples are distributed for several reasons: To stimulate trail of a Product/ Service to increase sales volume in the early stages of PLC, to obtain desirable distribution. The samples can be distributed through in store sampling (food Product/ Services and cosmetics), door to door sampling, mail sampling, (through postal service), news paper sampling, mobile sampling, on package sampling, professional sampling(drugs). 2) Premiums:- Premiums are goods offered either free or at low cost or an incentive to buy the Product/ Service. Premiums are offered as bonus, prize, gifts or other free offer BDT Premium can be used to boost sales to attract competitors customers, introduces different Product/ Services. E.g.:- Aquafresh toothpaste- At the launching of Aquafresh toothpaste offered two tubes at the price of one. Colgate offered 125gm. tube for the price of 100 gm. Santro- book year santro today & take home a world space Hitachi digital radio receiver worth BDT 4990/- free.
Pepe- Buy Product/ Services worth BDT 4000/- & get a bag worth BDT 888/- free. Adidas- Buy Product/ Service worth BDT 2800/- and get a Adidas bag free. 3) Contests: - Contests of various kinds constitute widely used sales promotion tools. There are consumer contest which are open for all, consumer contest are given wide publicity to attract the participation of the widely scattered consumer base. Consumer contest take a variety of forms- Quiz contests, beauty contest, car rallies, scooter rallies, suggesting a logo etc. Contests can be divided in to 2 broad categories- Skill competition & sweepstakes. One form of sweepstakes is a game & scratch off cards with instant winners & prizes are an important promotional tool. E.g.: (i) Nescafe shake contest Nescafe shake contest offered BDT 5 lacks as total prize money with BDT 1 lack for the first prize. The total number of prizes ran to 21000. The contest had a specific objective to make consumers aware of Nescafe as a cool summer drunk in addition to this traditional image of a hot beverage. (ii) Cadburys family contest- Cadbury announced fabulous prizes round the world, economy class are ticket for two adults & two children plus BDT 1 lack in prize money. The participant has to submit a minimum no. of Cadburys wrappers & coin a jingle to participate in the contest. The campaign helped to increase the sales. (iii)Lakme Create your own shade contest Lakme lever held the to elle 18, Create your own shade contest for the target audience of elle 18 range of colors cosmetics & fragnances. The participants were required to create own shades. The winner created a sparkling blue shade & later Lakme launched the new shade in the market. (iv) Pepsi contest for children Pepsi ran a contest among children to promote its potato chips brand ruffles. Nearly 500 children from a school were collected 30 of them were picked to speak for a minute the winners were given ruffles. Pepsi had covered 250 schools and 125000 students across the country spending BDT 2 lacks only. 4) Demonstration:- Companies resort to Product/ Service demonstration for sales promotion especially when they are coming up. With a Product/ Service new to the market. In Bangladesh Product/ Services like beverages, washing powders, electronic Product/ Service have utilized Product/ Service demonstration as a tool of sales promotion. it may be(i) Demonstration at retail store. (ii) School demonstration. (iii)Door to door demonstration. (iv)Demonstrations to key people. 5) Coupons: - Coupons are certificates which offer reductions to consumers for specified items. Coupons distributed through newspaper, magazine advertisement or by direct mail. Coupons enchoose the customer to exploit the bargain and them also serve as an inducement to the trade for stocking the items. Types of coupons(i) Instant redemption coupon- Consumers can immediately redeem the coupon. (ii) Bonus back coupon- Coupons can be placed inside packages so that customer cant redeem them quickly. (iii) Scanner delivered coupon- Firm can issue coupons at the cash register. These are triggered by an item being scanned. (iv) Cross ruffling- It is the placement of a coupon for one Product/ Service on another Product/ Service. E.g. a coupon for an onion sauce placed on a package of potato chips is a cross scuffling coupon. (v)Free standing inserts coupons can be delivered to consumers through news paper. (vi) In store couponing- Coupons are distributed in a retail environment. 6) Trade fairs and exhibitions:- They form one of the oldest practices of sales promotion. Trade fair & exhibition provide companies with the opportunity for introducing and displaying their Product/ Services. This brings the companys Product/ Service and the consumers direct contact with each other. Trade fairs have become a handy and effective tool of sales promotion. Orders and enquiries worth billions get generated at international trade fair BDT 7) Discounts and price of E.g. 20% off on levis 10% on Tanishq 8) Free gifts/Gift cards- Companies also give gifts to consumers, dealers and key people. These gifts include pens, diaries, table, decoration. Gifts normally carry the companys name and logo. The gifts are intended to create goodwill towards the company. 9) Exchange schemes/Money back offers- This is the latest sales promotion tool in consumer disables market. E.g. Akai exchange scheme- Bring in your old color TV with remote. Videocon money back offer. Philips- 5 in 1 offer.- Philips TV, 2 in 1, Mixer, grinder, rice cooker at an attractive price. Sponsoring the games and teams- Many companies like reliance, Pepsi, Pentaloons, Maruti sponsor different games and sports in the country and abroad. Q. What are the tools of sales promotion used for business and industrial goals? Ans. Sales promotion is targeted for business and industrial goods also Industrial Product/ Services differ with that of consumer goods. The tools which are used are1) Trade shows: - The industrial Product/ Services are displayed and demonstrated to the members of trade and industry. The representatives explain about the Product/ Services. The trade shows can be useful for smaller firms which cant much in advertising and also salesman can make for more contacts. Trade shows are important rules for reaching potential wholesalers & distributors for a companys brand. 2) Business gifts:- These gifts are given as a part of building and maintaining a close working relationship with suppliers business gifts may include small items of jewellary, watch, electronic items, expensive trips. 3) Trial offers:- Trial offers are particularly well suited to the business and industrial market. Trial offers provide a way for buyers to lower the risks of making a commitment to one brand over another. Trial offer is a good way to attract new customers who need a reason to try something new.
4) Frequency program: - high degree of travel associated with many business professionals make frequency programs and an ideal form of sales promotion for the business and industrial markets. This can be used in airline, hotel and other industries. 5) Coupons:- Coupons are used in business to business sector. Coupons must reach the hands of a purchasing against or someone who has the authority to make decision. 6) Contest and sweepstakes:- As like in consumer promotional methods. Customer methods. Business buyers are also interested in winning prizes as are customers in other situations. 7) Sampling:- Sampling is an excellent method to encourage a business to buy a Product/ Service. E.g. producing a sample in the area of process materials has the advantage of giving the engineers an opportunity to analyze the materials to see if it meets their standards. Through analysis they may find that the material is actually superior to the Product/ Service they currently use. 8) Bonus picks:- offering a prospective a bonus pack may attract new users as price is a negotiated item in our B2B sector price of discount can be offered by vendors seeking to obtain a new business contract. 9) Other tools:- They may include demonstrations, free training, warranties, credit faculties maintenance services, films, publicities and audio visual aids. Q. Discuss the promotional tools aimed at internal organization? Ans. Promotional of internal organization concern with the steps to be taken for a sound promotional programs. The elements of internal promotion are as follows1) Approval of promotional philosophy:- The success of a promotional program depends on the attitude of the top management. There for a promotional program requires the approval of the top management. The manager has to make a cost profit analyses so that top management appraise him about the profitability of program. 2) Product/ Service department for marketing:- Quality of a Product/ Service is responsible for the success of sales promotion program. As the customers are quality conscious and he always makes a comparison with that of competitors Product/ Service before taking the final decision of purchase. Therefore the Product/ Service manager should continuously work on improving the features of the Product/ Service. 3) Coordination with advertising department:-It is the advertising department that make the ground for the sales by giving Product/ Service knowledge among the distributors as well as potential customer BDT When the frequency of the advertisement is reduced then the sales promotions frequency start increasing. Therefore a coordination has to be made with the advertising department. 4) Coordination with sales department:- Sales promotion program can be successful if a proper exhibition is established with the sales department. Its includes arranging and organizing sales meetings and conferences, organizing contest, sales exhibition, traveling to sales personal etc. Q. What are the needs for evaluation of sales promotion program? Discuss the methods of evaluations of sales promotion program. OR Discuss the needs for evaluations of sales promotion program. OR Why the need arises for evaluations of sales promotion program? Explain. Ans.- Though almost all companies resort to sales promotion techniques , only some of them follow it in a planned way. The conditions for the success of sales promotion program are as follows:1. Identify the requirement The firm needs to find out. It is to bring in substantiate extra sales immediately. It is to offered accumulated stocks ? It is to regain loosing consumer interest in the Product/ Service etc. 2. Identifying the right promotion program-The firm has to select the program suitable for current need & situation the choice of the firm should be deducted according to the resources available with the firm. 3. Enlisting the involvement of salesmen- Often sales promotion program are conceded & planned at the head office . But for the campaigns to succeed, it is essential that the salesmen be briefed on the contest & contest of the program. They have to be informed of their roles in the conduct of the program. 4. Enlisting the support of the dealers:- It is also essential to enlist then support of the dealers in any large scale sales promotion venture. Since the major part of the activity is around the dealer shop, the pop material and the Product/ Service under campaign will get the required prominence. Only if the leader so dealeBDT 5. Enlisting the advertisement agencys support:- The adevertising agencies support is also essential for the successful working of a sales promotion campaign. carrying out a sales promotion campaign is as challenging as conditioning an advertising campaign. So companies while commetting heavy finds for sales promotion make it a point ensure that that they benefit from the experience and experlise of their agency. 6. Timing of the campaign:- The sales need of the company is the prime factor that desides the timing. But the firm has to eansider factors like seasonality of purchase of Product/ Service. Need for evolution:- The need for evaluating the sales promotion programs are1. Identifying growth and development opportunity. 2.Taking correction steps in case of any draw back. 3.To measure the effectiveness and achievements of objectives. 4.Facilities for future planning. 5.To encourage for research & innovations. 6.To motivate the employees into have contributor. 7. to know the maturity limit of sales promotion program. 8.To study new & modern tools of promotion. 9.To get allocated maximum budget for sales promotion. Methods of evalution:1. Sales data method- This method is a widely a accepted practice. In this method , sales volume or market share prior to any sales promotion techniques are measured . Eg. If market share of a Product/ Service before the introduction of sales promotion is 4% , during the period 10% & immediately after the program 6% ,Thus giving an increase of 8%. Showes that new customers are created by the sales promotion program.
2. Consumer panel data- This technique help to identify that how the customers have been motivated by the sales promotion technique for longer purchase . How much quality have the customers purchased & What were the charges of their buying behavior after the sales promotion program. This technique help to identify the various classes of customers on new or old customers / women / men / industrial / general customers etc. 3. Consumer surveys- This method collects various kinds of information about the customers so as to analysis the effectiveness of sales promotion. The analysis of suchinformation help to know following things1) The numbers of customers who have remembered the techniques used. 2) The views opinion about these techniques. 3)How these technique have been helpful in influencing the buyers behavior & brand chore of customer? 4)Do the customer require any innovation to be differed in the Product/ Service? 5)Do these techniques improve the image of the firm? 6)Do they feel like using these techniques through the year? 4. Experiment methods- The effectiveness of sales promotion technique may be measured by experimenting them in selected markets. However there can be certain difficulties. They are as follows1) The consumer always looks for deals customers are interested only in the purchase in the items Which offer certain additional incentive with that of the Product/ Service. 2) The promotional tools at times can be very costly as, if the organization does not get expected results. Then the price of Product/ Service may be increased. 3) The cooperation from middlemen might not be smooth. Q. Define sales forecasting? Discuss the produce & the methods of sales forecasting. Ans. Sales forecast is the basis of corporate planning forecasting is a systematic attempt to Product/ Service the future on the basis of known facts. It is the result of numerous assumption made about the external and internal environment of firms. Sales forecasting is the estimate level of the company sales based on chosen marketing plan and assumed marketing environment. OR Sales forecasting is the climate of sales during some specific future period time & under a pre determined marketing plan of the firm. Important 1. it is the foundation of planning. 2. Companies uses the sales forecast to allocate resource across different functional areas. 3. It is the key factor in all operational planning throughout the company. 4. It serves as a base for sales force planning. 5. It plays a major role in the success of the organization. 6. It is the key to sales management. 7. It helps in profitability of the firm 8. It helps in facilitating Product/ Service ion planning 9. It helps in better financial planning. 10. It is developing sales strategies and promotional plans 11. It helps in suggesting R & D. 12. Also helps in better inventory control & sales quota determination. Process of sales forecasting :Determination of goals The sales manager should decide the goals for sales forecasting. The objectives may include determination of sales publicity programme, marketing methods, sales quota determination, estimation of working capital etc. Determining the factors affecting sales The controllable factors are like marketing & advertising policy, organization structure etc. & the non controllable factors like political & social systems, seasonal fluctuations etc. must be determined. Selection of techniques Suitable methods for sales forecasting must be selected keeping in view the objective time intervals resources and nature of the firm. Correction of data This is the step of collecting various kinds of informations & data related with future demands of Product/ Services. Analysis of market potential The next step is to analyze the data of market potential. Analysis requires two steps>> a) Select the market associated with Product/ Service demand. b) Eliminate those market segments that do not contain prospective business. Forecasting of future sales:Sales projection should be made for an entire Product/ Service line or for an individual Product/ Service or for companies total market or individual market segment. Making operational programme & the budget:The firm determines the requirements for various operational activities such as Product/ Serviceion purchasing marketing capital assets. On the basis of forecast the related plans such as sales budget sales quotes sales publicity and material acquirement are formulated Derivation of a sales volume objectives:A sales volume objectives for the coming operative period is hoped for the outcome of a companys short range sales forecasting procedure, The sales volume should be consistent with managements profit aspirations and the companies market capabilities. Evaluation & revision of forecasts:The sales executives should evaluate the forecasts carefully. The company should examine all the assumption on which it is based. The company should the forecasting process periodically. The first step in the review is to determine the accuracy of past forecasts to learn if changes are needed in the way forecasts are made if the company finds that sales forecasts are significantly different from actual sales in the period it should undertake a review of the sales forecasting process. Techniques of sales forecasting:I. Survey methods:-
a) Executive opinion b) Prudent manager forecasting c) Delphi method d) Sales force composite e) Detecting differences in figures f) Survey of buyer intention g) Product/ Service testing and test marketing. a) Executive opinion It consists of obtaining the views of top executives regarding future sales. The forecasts made by executives are arranged to yield one forecast for all executives or the differences are reconciled through discussion. b) Product/ Service manager forecasting In this method the company personnel are asked to assume the position of purchasers in customer companies. They must then look at company sales from a customers view point & prudently evaluate sales. c) Delphi method This method begins with a group of knowledgeable individuals estimating future sales. Each person makes a prediction without knowing others in the group have responded. these estimates are summarized. Now knowing how the group responded. They are asked to make another Product/ Serviceion on the same issue. This process of estimates & feedback is continued for several rounds. In final round involves face to face discussions among the participants. d) Sales force composite This method is based on collecting an estimates from each salesperson of the Product/ Services they expect to sell in the sale forecast period. The estimate may be made in consultation with sales executives and customeBDT e) Detecting differences in figures method In this method the sales person produces figures broken down by Product/ Service & customers and the area manager produces figures for the sales persons territory. They then meet & must reconcile any differences in figures. the process proceeds with the area manager producing territory by figures. f) Surveys of buyers intentions This method consist of contacting potential customers & questioning them about whether or not they would purchase the Product/ Service at the price asked. g) Product/ Service testing & test marketing This technique is of value for new or modified Product/ Services for which no previous sales figures exists & where it is difficult to estimate. Likely demand. It involves placing the pre Product/ Serviceion model with a sample of potential users beforehand & noting their reactions to the Product/ Service. Test marketing involves the limited launch of a Product/ Service in a closely defined geographical test area. II. Mathematical methods :a) Moving average technique Simplest way to forecast sales is to predict that sales in the coming period will be equal to sales in the best period. This forecasts assumes that conditions in the last period will be same as the conditions in the coming period. SALES t+1 salest + salest-1 + sales + s salest-n SALESt+1 = Forecasted sales SALESt = Sales in the present period.SALESt+1 = Sales in the period immediately past. b) Exponential smoothing models It is a type of moving average that represents a weighted some of all past numbers in a time series. with the heaviest weight placed on the most recent data. c) Regression analysis This technique is used to project sales trends in the future. The sales plotted are for each past time period. It determines and measures the associations between the sales & other variables. d) Projection of past sales It takes a variety of forms. To set the sales forecasts for the coming year at the same figure.May be moving average of the sales figures for several past yea BDT e) Time series analysis It is a statistical procedure for studying historical sales data this process involves measuring 4 types of sales variations long term trends, cyclical changes, seasonal variations & regular fluctuations. Then a mathematical model about the past behavior of the series is selected assumed values for each types of sale variation are insisted and sale forecast is made. f) Market factor analysis Market factor analysis determines market factors & measures their relationships to sales activity. g) Correlation analysis This method takes in to account the association between potential sales of the Product/ Service and market factor affecting its sales. h) E-charts this technique is furtherance of moving average technique. It also shows the monthly sales & cumulative sales. March 17, 2012
Marketing of Financial Services:Introduction to Marketing
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services-JAIBB Introduction to Marketing
Q.1 What is the nature & scope of marketing & why is marketing important? Ans.: Nature & Scope of Marketing: Marketing is an ancient art & is everywhere. Formally or informally, people & organizations engage in a vast numbers of activities that could be called marketing. Good marketing has become an increasingly vital ingredient for business success. It is embedded in everything we dofrom the clothes we wear, to the web sites we click on, to the ads we see. Marketing deals with identifying & meeting human & social needs or it can be defined asmeeting needs profitably. The American Marketing Association has defined marketing as an organizational function & a set of processes for creating, communicating & delivering value to the customers & for managing customers relations in ways that benefit the organization & the stake holders. Or Marketing management is the art & science of choosing target markets & getting, keeping & growing customers through creating, delivering & communicating superior customer value.
Or Delivering a higher standard of living For a managerial definition, marketing has been defined as the art of selling products but people are surprised when they hear that the most important part of marketing is not selling. Selling is only the tip of marketing iceberg. Peter Drucker says it this way that the aim of marketing is to know & understand the customer so well that the product or service fits him & sells itself. All that should be needed is to make the product or the service available. Eg. The success of Indica, the first indigenously designed car by Tata Motors. Backed by strong customers delight, the company designed a vehicle with luggage space & legroom & offered it a price easily available & affordable to middle class. (2) Gillette launched its March III razor. Marketing people are involved in marketing 10 types of entities: goods services, events, experiences, persons, places, properties, organizations, information & ideas. Therefore ideal marketing should result in a customer who is ready to buy. Importance of Marketing: Financial success of any organization depends upon marketing ability of that organization. There should be sufficient demand for products & services so the company can make profit. Therefore many companies created chief marketing officer (CMO) position to put marketing on a more equal footing with other e-level executives. Marketing is tricky & large well known business such as Levis, Kodak, Xerox etc. had to rethink their business models, Even Microsoft, Wal-Mart, Nike who are market leaders cannot relax. Thus, we can say that making the right decision is not easy & marketing managers must take major decisions about the features of the product prices & design of the product, where to sell products & expenditure on sales & advertising. Good marketing is no accident but a result of careful planning & execution. Marketing practices are continuously being refined to increase the chances of success. But marketing excellence is rare & difficult to achieve & is a never ending task Eg. NIRMA The brand icon of the young girl has adorned the package of Nirma washing powder. The jingle has become one of the enduring times in Bangladeshi advertising. Q.2 What are some fundamental marketing concept? Ans.: The various fundamental concepts are :(1) Exchange Concept : The Exchange concept holds that the exchange of a product between seller & buyer is the central idea of marketing Exchange is an important part of marketing, but marketing is a much wider concept. (2) Production Concept : The production concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available & expensive. Manager of production oriented business concentrate on achieving high production efficiency low cost & mass distribution. Eg. Haier in China take advantage of the countrys huge inexpensive labor pool to dominate the market, to manufacture PC & domestic appliances. (3) Product Concept : This concept holds that consumers will prefer those products that are high in quality, performance or innovative features. Managers in these organization focus on making superior products & improving them. Sometimes, this concept leads to marketing myopia, Marketing myopia is a short sightedness about business. Excessive attention to production or the product or selling aspects at the cost of customer & his actual needs creates this myopia. (4) Selling Concepts : This concept focuses on aggressively promoting & pushing its products, it cannot expect its products to get picked up automatically by the customer. The purpose is basically to sell more stuff to more people, in order to make more profits. Eg. Coca Cola (5) Marketing Concept : The marketing concept emerged in the mid 1950s. The business generally shifted from a product centered, make & sell philosophy, to a customer centered, sense & respond philosophy. The job is not to find the right customers for your product, but to find right products for your customers. The marketing concept holds that the key to achieving organizational goals consist of the company being more effective than competitors in creating, delivering & communicating superior customers value. This concept puts the customers at both the beginning & the end of the business cycle. Every department & every worker should think customer & act customer. Distinguishing Features of the Marketing Concept : (i) Consumer Orientation : The purpose of any business is to create a customer. It is the customer who determines what a business is(ii) Integrated Management with Marketing as the Fulcrum : Integrated management means that all the different functions of a business must be tightly integrated with one another. This is essential because every function has a bearing on the consumers & the aim is to see that all the functions make a favourable impact on the consumer. (iii) Consumers Satisfaction : The marketing concept emphasizes that it is not enough if a firm has consumer orientation, it is essential that with such an orientation, it should lead to consumer satisfaction. (iv) Realization of all Organizational Goals, Including Profits : The firm should not forget its own interests. It treats consumer satisfaction as the pathway to the attainment of goals of the organization. In short the marketing concept essentially represents a shift in orientation. From production orientation to marketing orientation. From product orientation to customers orientation. From supply orientation to demand orientation. From sales orientation to satisfaction orientation From internal orientation to external orientation. (6) Social Marketing Concept : This concept holds understanding broader concerns & the ethical, environmental & legal & social context of marketing activities & programs. The cause & effects of marketing extend beyond the company & the consumes to society as a whole. Social responsibility also requires that marketers carefully consider the role that they are playing & could play in terms of social welfare. (7) Holistic Marketing Concept : This concept is based on the development, design & implementation of marketing programs, processes & activities that recognizes their breadth. Holistic concept realizes that everything matters with marketing. December 22, 2011
Market Research Process
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services -JAIBB
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Market Research Process: Defining Problem and Objectives Exploratory research Preliminary information Problem definition and hypothesis suggestion ? Descriptive research Better describe marketing problems, situations, or markets Causal research Test hypothesis of cause and effect relationships Market Research Process: Develop the Research Plan Determine Specific Information Needs Target customer characteristics Patterns of product usage Demand factors Response of marketing channels Customer reactions Projected sales Gather Secondary Information Internal database sources Company, public, and university libraries Government and business publications Commercial data services On-line databases Internet data sources International data Advantages of Secondary Data Less time to obtain Lower cost than primary research Alternate means of access to information Benefit from resources of others Potential Problems With Secondary Data Information may not exist May not be: Relevant Accurate Current Impartial Market Research Process: Plan Primary Data Collection Research Approaches Observation Survey Experiment Observational Research Observing relevant people, actions, situations Mechanical observation, people meters, checkout scanners Some things not readily observed Survey Research Questions about knowledge, attitudes preferences or buying behaviour Most widely used source of primary data due to flexibility, information type collection, and sometimes quicker than other two methods
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Very difficult to construct properly; Unwilling/ unable respondents; answer questions which they have no knowledge; pleasing answers Experimental Research Best suited for gathering causal information Given different experimental treatments Variables controlled Responses measured and recorded Personal Interviewing Individual Talking with people in homes, offices, on the street, or in shopping malls ONE ON ONE Computer interviewing Group Focus group Online Electronic Sampling Plans - three issues What is the sampling unit? What is the sample size? What is the sampling procedure? Probability Samples Simple random sample Equal probability Mutually exclusive groups Random sample drawn Non-probability Samples Convenience sample Select easiest population Judgement sample Select for accurate response Market Research Process: Research Instruments Questionnaire Question contribution Question form Closed-end Open-end Wording Ordering Mechanical People meters Checkout scanners Eye cameras Market Research Process: Present the Research Plan Written Research Proposal Management problems addressed by research Research objectives Information sought Sources of secondary information Methods of obtaining primary data Benefits and costs Market Research Process: Implement the Research Collect Data Company research staff Outside services
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December 22, 2011
Most costly and error process Analyze Data Isolate important information and findings Check accuracy and completeness Tabulate results Market Research Process: Interpret and Report Findings Focus on useful decision support Clear and open Discuss interpretation Team approach ? Ultimate decision with management
Marketing Strategy and the Marketing Mix
Marketing Strategy and the Marketing Mix: Customer-Driven Marketing Strategy Market segmentation is the division of a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mixes Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts Customer-Centered Marketing Strategy Market targeting is the process of evaluating each market segment? attractiveness and s selecting one or more segments to enter Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer Developing an Integrated Marketing Mix Marketing mix is the set of controllable tactical marketing tools? product, price, place, and promotion? that the firm blends to produce the response it wants in the target market
December 22, 2011
Marketing Challenges
BANKING DIPLOMA EXAMINATION Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB) Marketing of Financial Services -JAIBB Marketing Challenges Technological advances Rapid globalization Deregulation Privatization Free market economy Growing attention to social and environmental responsibilities Greater use of marketing by nonprofit and public sector organizations
Customer empowerment
December 22, 2011
Role of Marketing
Role of Marketing of Financial services in the Economic Development Like Bangladesh

Increase in agricultural production Development of foreign trade Market development and expansion Proper distribution Increase in national income Creating employment opportunity Facilitating competition Increase export Increasing industrial production Creation of new utility of product Maintenance of economic stability Service marketing Development of standard of living
December 15, 2011 Differentiation for gaining competitive advantage.

BANKING DIPLOMA EXAMINATION Marketing of Financial Services -JAIBB
Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB)
Sources of Differentiation

Differentiation: A firm differentiates itself from its competitors when it provides something unique that is valuable to buyers beyond simply offering a low price. It is one of the two types of competitive advantage a firm may possess/hold.
Differentiation allows a firm to command
a premium price i.e. additional payment of price through by lowering buyers cost or enhance buyer performance so that the buyers will be willing to pay price. to sell more of its product at a given price to gain better buyers loyalties.
It is to be noted that, differentiation not only happen in product or marketing practices but it can arise anywhere in a firms value chain i.e. successful differentiation strategies grow out of the coordinated action of all parts of a firm not just the marketing department.
Steps in differentiation: 1. 2. Determine who the real buyer is. The first step in differentiation is to identify the real buyer. The firm, institution, or household is not the Identify the buyers value chain and the firms impact on it. A firms direct and indirect impact on its buyer value chain will determine real buyer, but rather one or more specific individuals within the buying entity who will interpret use criteria as well as define signaling criteria. the value a firm creates for its buyer through lowering buyers cost or raising buyers performance.
3.
Determine ranked buyer purchasing criteria. Analysis of the buyers value chain provides the foundation for determining buyer purchase
criteria. Purchase criteria take two forms such as use criteria (uniqueness in meeting use criteria creates buyer value) and signaling criteria (uniqueness in meeting signaling criteria allows that value to be realized). Purchased criteria must be identified in terms that are operational, and their link to buyer value calculated and ranked.
4.
Assess the existing and potential sources of uniqueness in a firms value chain. Differentiation can stem from uniqueness throughout a
firm s value chain. A firm must determine which value activities impact each purchase criteria. It must then identify its existing sources of uniqueness relative to competitors, as well as potential new sources of uniqueness. 5. Identify the cost of existing and potential sources of differentiation. The cost of differentiation is a function of the cost drivers of the activities that lead to it. Some forms of differentiation are not very costly and pursuing them may even lower cost in ways that the firm has overlooked. 6. 7. Choose the configuration of value activities. A subtle understanding of the relationship between the firms and the buyers value chain will Test the chosen differentiation strategy for sustainability. Differentiation will not lead to superior performance unless it is sustainable allow a firm to select a configuration of activities that creates the largest gap between buyer value and the cost of differentiation. against erosion or imitation. Sustainability grows out of selecting stable sources of buyer value, and differentiating in ways that involves barriers to imitation or where the firm has a sustainable cost advantage in differentiating. 8. Reduce cost in activities that do not affect the chosen forms of differentiation. A successful differentiator reduces cost aggressively in activities that are unimportant to buyer value. December 14, 2011
Promotional Mix of Bank Services

Promotional mix of Bank service: A study on Dutch Bangla Bank Ltd. - (DBBL)
Introduction: Promotional mix is the combination of all the promotional tools used for communicating the offered services. Dutch Bangla Bank Ltd. (DBBL) is such a reputed service provider that has become differentiated from other Banking organizations in Bangladesh which was formed as a joint venture having 70% share of Bangladesh and 30% of Europe. DBBL got its commence paper or the permission of starting business functions in 1995on 4th July. It commercially started its business function with a branch at Dhaka first on 3rd June 1996. With in a short time it grew faster in the market. At present it is a fully online banking organization in our country having 39 branches all over the country. Not only that it has the highest number of ATM booths in our country. It has made the banking services easier to the country people through 130 ATM booths that are the highest number in comparison to all the present government and private banks in our country. With all its promotional mixes DBL is operating functions effectively maintaining corporate social responsibility refunding the money back from a certain profit portion. For the well combination of the promotional mix and its contribution DBL has occupied a distinctive position in the market. In the CAMEL (Cash, Assets, Management, Equity and Liability) study under the supervision of central bank of Bangladesh DBL occupied the first position in2004. In the year of 2005 it occupied the second position. In Bangladesh DBL has introduced on line banking through Internet, POS and ATM. The success of offering the proposed service has been possible by the contribution of the sound blend or the promotional mix including both the printed and the electronic media. Reasons for choosing DBBL: There are a lot of service organizations available in our country. But in our case study we have selected DBL as it has fame in the market. Our study will cover only the promotional mix side, about this regard the promotional mixes are known a little bit to us. It is known that if the offerings are not matched with the communication then customer will not be satisfied. Ultimately word of mouth will not be generated. Here DBL seemed very much careful. We know that communication gap is very much crucial for any service organization to make it successful which is the deviation between service provided and communication disclosed. DBL is sincere about this regard and that has influenced us to select DBL as an object for our case study. THEORETICAL FRAMEWORK: The theoretical framework refers to arguments quoted by the renowned experts about the mentioned topic. Here the theories developed by the writers are bellows: According to McCarthy promotion is communicating information between seller and buyer to change their attitudes and behavior. According to Philip kotler promotion stands for the various activities the company undertakes to communicate its products merits and to persuade target customers to buy them According to William J Stanton the term promotion is used to refer to the use of persuasive information which is conjunction with other elements of marketing mix. According to Philip kotler promotion or communication mix means combination of all promotional tools and the firms promotion or communication mix communicates the firms positioning strategies to its relevant markets, including consumers, employees, stockholders, and suppliers Communication mix: according to Douglas Hoffman the firms promotion, or communication mix, communicates the firms positioning strategy to its relevant markets including consumers, employees, stockholders and suppliers. The term communications mix describes the array of communications tools available to marketers. Marketers need to combine the elements of the marketing mix (including communication) to produce a marketing program. The elements of marketing mix fall in to four broad categories: personal selling, media advertising, publicity and public relations and sales promotions. Personal selling: According to Philip kotler personal selling is an oral presentation and conversation with one or more prospective customers. According to William J Stanton personal selling is the direct presentation of product or service to a prospective customer by a representative of the organization selling it. Advertising: According to Philip kotler Advertising is any paid form of non- personal presentation and promotion of ideas, goods, or services by an identified sponsor
According to William J Stanton advertising is impersonal mass communication that the sponsor has paid for and which the sponsor is clearly identified. Publicity: According to Philip kotler publicity is a non personal stimulation of demand for product, service or business that is transmitted through a man, media at no charge. According to William J Stanton publicity is a special form of public relation that involves news, stories about an organization or its services. Public relation: According to Philip kotler It includes a variety of programs designed to promote or protect a companys image or its individual products According to William J Stanton public relation encompasses a wide variety of communication effort to contribute to generally favorable attitude and opinion toward an organization and its service. Sales promotion: According to Philip kotler sales promotion a key ingredient in marketing campaigns, consists of a diverse collection of intensive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or trade According to William J Stanton sales promotion is demand stimulating activity designed to supplement advertising and facilitate personal selling. It is paid for by the sponsor and frequently involves a temporary incentive to encourage a purchase. Empirical study: Empirical study refers to the reality of perception. The reality about its communication mix or promotional mix is up to mark. What it is promising to the customers through the different promotional mixes are being matched with the reality. The services include:
Usual Banking services. Online Banking facilities. Services to the distressed community
DBL uses all types of promotional mixes to cover the target market. It is currently using both the printed and electronic media. The elements of promotional mix consist of: Advertising. Sales promotion. Public relation. Publicity.
Word of mouth: DBL is communicating the proposed services through the mentioned elements of promotional mixes. Now a short explanation of the service offered can be viewed. Usual Banking services: DBL offers the usual Banking services include the fastest and speedy transactional account services consist of current account, savings account, fix deposit scheme and special target account. The well-trained front desk executives with well-decorated inanimate environment are performing the activities very well. Online Banking facilities: DBL is providing the shoposticated target customers with online Banking facilities through ATM card, Internet, POS and SWIFT (POS and SWIFTs meaning was not available in annul report 2005 of DBL) Earlier it has been noted that country wide it has the highest number of ATM booths including 130 by which the customers are withdrawing money with in 24 hours. It is offering the customers four types of cards and these are Classic card, Silver card, Gold card and Visa electron. For the Classic card there is no charge and for the first time clients, Silver card is offered to the current account holders who can transect anytime and any amount according to the deposit, Gold card is allowed to the account holders who have at least 500000 tk deposit and through the Gold card the customers can shop in credit basis up to 2000000tk, Visa electron is under process that may offer unique service to the client in future. The foreign client can send money from any corner of the world through the Western Money Union, as DBL is one of the representatives that serves the nation the service through the Internet facility. Services to the distressed community: Besides the important services performed or the clients DBL is performing some distinct activities for the people who are distressed in some of cases they are deprived of a lot. DBL is doing a lot for those people through performing the corporate social responsibility (CSR) countrywide. DBL previously would allocate 2.5% of its annual profit to perform the CSR activity and now it is allocating 5% of its annual profit for the CSR activities. DBL has formed a foundation for smooth performances named DBL foundation. To build the corporate image it is donating a lot of money to different charitable organization, donating to the flood affected and winter affected people in our country. Promotional mix used by DBL: We know that the combination of all the promotional tools is referred to as promotional mix. Here DBL is blending a sound mixer by which it is trying to caver the whole target market. Now we will view separately all the elements of promotional mix. Advertisement: DBL is using all the printed media and electronic media for communicating the services to the clients. The elements of the mixes are as follows: Printed media: DBL is using all the printed media including the newspaper, magazines, festoons, billboard, and etc. to communicate their services. Electronic media: It includes different TVs both the government run and privately own to position the idea your trusted partner. Sales promotions: Sometimes DBL undertakes sales promotion to attract the existing and new clients short time basis but not appointing any personnel specifically as sales personnel. Word of mouth of the existing clients act as sales promotion for that period. Public relation: DBL sponsors different seminars, symposiums, math Olympiad to build corporate relation with the mass people.
Publicity: As DBL is performing a lot of social responsibilities. It was awarded the number one CSR performer in the southern Asia in a conference held in Philippines. Not only that different media both views the countrywide nonprofit able performances printed and electronic which are publishing and telecasting the news countrywide. it also did the beatification of part of Dhaka city, Hotel Sheraton to Ishkha road and that attracted the media as a result DBL is getting publicity than any other service organization in our country that represent obviously the reality. Word of mouth:We know that satisfied customer is the best source of promotion and DBL has a great impact of word of mouth, which is generated from the existing satisfied customers as they promote the bank services that they avail. Further more those potential customers who dont have account but wish to open an account in future for availing the smart service of DBL. In the study we find that the promotional mixes of DBL are contributing a lot to retain the goodwill and day by day the authority is being serious about making a sound mixer of their communication mixes. Analysis: The service organizations offer their offerings through the promotional mixes. If the reality is matched with the promotional messages then no problem but the situation will be very crucial if promises are not matched with the real services. The deviation between the theories with the practice is analysis. In the study we find that the inanimate environment of the DBL of - branch is very much modern and the behavior of front line executives are standard. The standard of each advertisement in different media are very fine. Especially the social responsibilities performed by the DBBL attracted to the eye of many. Actually DBL has properly used its promotional mixes. It is trying to provide the standard and promised services to its clients. DBBL thinks that the service provided will make the customers loyal as a result those customers will further recommend the others. For doing that it is emphasizing on the publicity and public relation and publicity that is the result of CSR. The target customer of DBBL is the higher customer group and slightly he upper middle class group as well. DBBL has been successful to communicate with the target customers by the proposed services through the promotional mixes. The proposed on line banking has matched with the reality also. In short it can be asserted that the differences between the services of DBBL communicated through various tools and the real mixers of promotion, the performances of individual promotional tool and the reality of the service offered are positive to DBBL and to the customers. Conclusion and Recommendations: The promotional mixes and the effectiveness of them are fully judgmental but the reality of the services can be understood better if we would possess accounts at the bank. In spite of this we can say that this joint venture is performing very well in serving the nation very well. But still there are some recommendations, which are as follows: Target customers: Although DBBL has targeted the higher-class income group but most of the people in our country are middle class and lower class income group. DBBL can target that segment to increase its market share although it has become successful to satisfy the higher income people. Customer training: We know that DBBL has 130 ATM booths allover the country but the people are less trained about this technology. So it can provide more training to the targeted customers about different card including classic card, silver card, and gold card. Although visa electronic is not available but the band has to teach the people about the upcoming technology. Although it is providing the prospectus and other written learning aid but the language is in English. Those can be translated in to Bengali for the betterment of the customers. New social task: In order to draw the attention of the people DBBL can create new ides that means the scope for performing the Corporate Social Responsibility (CSR) such as promoting the bad image of early marriage and creating mass awareness about it. Informing the people about the Sanitation and first aid in critical situations. In brief we can claim that, to the customers DBBL is a popular bank. For this it has obtained 2nd rank. It blended a good promotional mix. Consumers perceive a little risk. It is offering professional banking. Promotional mixes are effectively communicating. Day by day it will target new customer. Its slogan will be correct your trusted partner. It will be very careful for social responsibility. It will show the customers more honesty. For adding value to customers no conclusion. DBBL will be more careful thats our recommendation. STUDY MATERIALS

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Principles of Economics & Bangladesh Economy

Principles of Economics & Bangladesh Economy

Principles of Economics & Bangladesh Economy

Principles of Economics & Bangladesh Economy

April 10, 2012

Business Communications-Sample: Banking Letters-3

Business Communications-Sample: Banking Letters-2

Bangladesh Krishi Bank

Agrabad Branch Chittagong P.O. Box No. 332

Business Communication: (Sample) Banking Letters

Sample: Banking Letters

Contract Act 1872 -Laws and Practice of Banking-JAIBB

Laws and Practice of Banking-JAIBB Meaning and Essentials of Contract

Proposal and Acceptance

Some Important Short Questions-Laws and Practice of Banking-JAIBB

Laws and Practice of Banking-JAIBB Some Important Short Questions Define

Ans.: It is simply meaning the promotion of litigation in which one had no

Laws and Practice of Banking-JAIBB

Short Note: Law & Practice of Banking

Laws and Practice of Banking-JAIBB

Short Notes: Law & Practice of Banking

Business Organisation-Organization and Management-JAIBB

Organization & Management-JAIBB Business Organisation

Accounting for Financial Services: Accounting Standard

Accounting for Financial Services : Principles, Concepts and Conventions

Accounting : Principles, Concepts and Conventions

Accounting for Financial Services- JAIBB

Accounting for Financial Services- JAIBB

Accounting for Financial Services-JAIBB

In these notes we will find the following topics:

Short Notes: Accounting for Financial Services

Marketing of Financial Services: Market Segmentation

A. Levels of market segmentation.

1. Segment marketing : 2. Niche marketing : 3. Local marketing : 4. Individual marketing

1. Homogeneous preferences : 2. Diffused preference : 3. Clustered preference :

1. Survey stage : 2. Analysis stage : 3. Profiling stage :

G. Selecting the market segments.

Marketing of Financial Services: Buyer Behaviour

Marketing of Financial Services:Marketing Environment

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E. Political legal environment.

F. Social cultural - environment.

Marketing of Financial Services-Designing Competitive Strategies

Designing Competitive Strategies

Designing Competitive Strategies

Market leader Strategies.

(c) Preemptive defense :

Market challenger strategies.

C. Attacking strategies of market challenger.

D. Choosing a specific attack strategy by the marketer challenger.

E. Market follower strategies

Market Nicher Strategies.

Marketing of Financial Services: Introduction to Marketing

The Scope of Marketing

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Demand States and Marketing Tasks

Core Marketing Concepts

Difference between selling concept and marketing concept

Marketing of Financial Services: Industry Concept of Competition

Marketing of Financial Services: Sales Promotion

Marketing of Financial Services:Introduction to Marketing