Pillai's

Pillai's Institute
Institute of
of Management
Management
Studies
Studies andand Research
Research
Marketing
Finance
2010
 Integrated Business System for information management

Marketing System

HRD System Materials System

? ?
?
? ?
? ?
?

Production & Stock System Finance System

Marketing Finance Is also dependent on other systems action performances

 Marketing Finance

Finance or Financing

a) Decide sources of funds

b) Identify sources available
c) Identify sourcing costs
----------------------------------------------
d) Estimate OutFlow and
e) applications of Funds
f) Identify application costs
 Sourcing and Applications of finance
resources depend on requirements for
the growth of the organisation.
Return-On-Investments are positive balancing on
the value of resources deployed to the profits
generated and the growth.

Returns can be direct or indirect /

Tangible or Intangible
Marketing Finance

Hence…..Whatare
Hence…..What arethe
theCosts
Costsoror
Whatare
What arethe
theexpenses
expenses
Costsor
Costs orExpenses
Expensesare areassociated
associatedby
byactivities
activities
initiatedand
initiated andits
itsquantum
quantum
Understandingactivities,
Understanding activities,costs/expenses
costs/expensescan
canbe
be
allocated/apportioned
allocated/apportioned
 Marketing
Marketing Finance
activities

Understand Co-ordinate Execute Sales

Identify Sales Get Sales Get
the Product Identify clients Production / Order &
personnel Orders Collections
to promote Inventory Distribute

Product Promotion
Product Promotion
Market Intelligence
Market Intelligence
Marketing Stragegy
Marketing Stragegy
Completing Sales
Completing Sales
 Marketing Finance

What are organisations Marketing costs “associated” with

Understand Co-ordinate Execute Sales

Identify Sales Get Sales Get
the Product Identify clients Production / Order &
personnel Orders Collections
to promote Inventory Distribute

Research
Research Research
Research Recruitment
Recruitment Salesperson
Salesperson Manpower
Manpower Staff
Staff Costs
Costs Staff
Staff Costs
Costs
Costs
Costs Costs
Costs Costs
Costs costs
costs Costs
Costs
Freight
Freight Costs
Costs Co-ordination
Co-ordination
Human
Human Human
Human Salary/wages/I
Salary/wages/I Traveling
Traveling Production
Production Costs
Costs
Resources
Resources Resources
Resources ncentives
ncentives Costs
Costs Costs
Costs Delivery
Delivery
Costs
Costs Costs
Costs Costs
Costs charges
charges Cost-of-
Cost-of-
Communicate
Communicate Warehousing
Warehousing interest
interest
Traveling
Traveling Costs
Costs Costs
Costs Misc
Misc costs
costs
(above
(above Costs
Costs (above
(above Costs
Costs Costs
Costs
associated
associated associated
associated Other
Other admin
admin Inventory
Inventory
with
with time)
time) with
with time)
time) Other
Other admin
admin costs
costs carrying
carrying costs
costs
costs
costs
Product
Product Communicate
Communicate //
“manuf
“manuf // make
make correspond
correspond //
avaialable”
avaialable” admin
admin costs
costs
costs
costs

Admin
Admin Costs
Costs
(stationery,
(stationery,
communicate
communicate ,,
etc)
etc)
 Fixed
Organisations Marketing costs can be
Variable

Product Costing

“Manuf” Costs Distribution costs Overhead costs Mark-up

By Internal Sources
Investments in Marketing System / Services
By External Sources
Provide financial costs resources required for
Marketing / Sales of Product / Services By Effective Human resources

By competative products/services

Marketing Finance
 Provide financial resources required for
Marketing / Sales of Product / Services

By Internal Sources

By Outstanding Collections

Analysis

Clientwise payments Interest receivable Stakeholders funds

Marketing Finance
 Provide financial resources required for
Marketing / Sales of Product / Services

By Outstanding Collections

Sales Receivables

Client wise Product wise Territory wise Other Query

Assists in Costs allocation

(Investments)

Identify R.O.I

Marketing Finance
 Provide financial resources required for Marketing Finance
Marketing / Sales of Product / Services

By Outstanding Collections

Sales Receivables

Client wise Product wise Territory wise Other Query

Returns in Costs allocated

(Investments)
Loyalty and
CRM
Product Creating value and
development & “ownership”
positioning

R.O.I
 Revenue
Finances
Marketing Finance
Marketing
Marketing

Local Sales Export Sales

Finances Marketing

Sales Value Order from

(Invoicing) Bank Credit Bank Credit Overseas
buyer

Collections Internal Internal Payments recd

Sources Sources

Financial
Inventory of Sales
Institution
Product Drawback claim
Sourcing Internal
Sources

Many others from Goodwill and Patents Licenses

other system
 Depends on
 Product “value”
 Customer acceptance
 Selling competence
 Forecasting and Trend analysis

Marketing Finance
 Marketing Finance

CST
Finances
Duty refund
IncTx
Reversible
Excise Export
Sources
Sources Applications
Applications Processes /
Requirements credit
Modvat
Drawback
Marketing System Mark-up claim
decisions
Imports
against
Activities Exports

INR Xchg convert

collections collections

Local Export Advance

Invoices Invoices Payments
Local Marketing Export Marketing

Local Export Local Export

Direct Sales Trade Channel Sales

Returns Recovery

Product Costing Product Pricing

Leader Pricing
(Govt Policies)
 Sales Statistics
Market Intelligence “Marketing” Forecasting
Market Research

Scientific
Forecasting

Marketing Budgeting
Probability

Theory

Marketing models attempt to describe or

Marketing models attempt to describe or
predict behaviour.Usually include a random
predict behaviour.Usually include a random
element to allow for imperfect knowledge
element to allow for imperfect knowledge

Marketing Finance
 Sales Statistics Market Research Market Intelligence

ProbabilityTheory
Local Direct
Export Tender
Sales

ntific
Scie sting Processes
“Marketing” Forecasting ca
Fore

Product Product Supply Payment

Marketing Planning Sizing pricing chain Mode

Preparing Marketing Payment Payment

Preparing Marketing type recieve
Infrastructure
Infrastructure

Achievement Distribution
Discounted Cash
Flow
Despatch Warehousing

In-House Exter nal

Marketing Finance
 Local Direct
Export Tender
Sales

Tender is invited in two parts i.e. (1) Technical bid and (2) Financial
bid. The tender form for Technical bid prescribed in Annexure-I and the tender
Product
form for the financial bid in pro form prescribed in Annexure-II complete in all Processes Quoting for Tender
pricing
respects should be submitted at the………… in two separate sealed covers
addressed to the…………………………………

Buying Tender applications form from ….(Tenderer)

Marketing Finance
 Tender
Finances involved

Tender is invited in two parts i.e. (1) Technical bid and (2) Financial
Cost
bid. The Costbid prescribed in Annexure-I and the tender
tender form for Technical
Discounted Processes
form for of of prescribed in Annexure-II
the financial bid in pro form complete in all Quoting for Tender
respects should be submitted at the………… in two separate sealed
Technical bid Financial bid
Cash Flowcovers
addressed to the…………………………………Purchasing
Tender Document (Travelling,
payable communication, Buying Tender applications form from ….(Tenderer)
Courier,etc) Bills should be submitted on Each technical bid should
The successful bidder of
monthly basis with all accompany the Crossed Demand
the contract has to submit
supporting and payment will draft/ Bankers Cheque of
a Performance
be make within 30 days from Rs.10,000/- as Earnest money
Guarantee either by way
the date of submission of bills deposit
of Fixed Deposit or Bank
after deducting TDS as Guarantee receipt of Rs.
applicable. The log book 10,000/- per product within
maintained will be the basis for three days from the day of
making payments obtaining the contract.

Product Costing Product Pricing

Marketing Finance
 Sales Statistics Market Research Market Intelligence

ProbabilityTheory
Local Direct
Export Tender
Sales

ntific
Scie sting Processes
“Marketing” Forecasting ca
Fore

Product Product Supply Payment

Marketing Planning Sizing pricing chain Mode

Preparing Marketing Payment Payment

Preparing Marketing type recieve
Infrastructure
Infrastructure

Achievement Distribution
Discounted Cash
Flow
Despatch Warehousing

In-House Exter nal

Marketing Finance
Discounting is a financial mechanism in which a debtor obtains the right to
Local Direct
delay payments to a creditor,Export
for a defined period of time, in exchange for a
Tender
Sales
charge or fee.Essentially, the party that owes money in the present purchases
the right to delay the payment until some future date.The discount, or charge,
is simply the difference between the original amount owed in the present and
the amount that has to be paid in the future to settle the debt.
Product
pricing
The discount is usually associated with a discount rate, which is also called the
discount yieldThe discount yield is simply the proportional share of the initial
amount owed (initial Costliability)
of
that must be paid to delay payment for 1 year.
Discount Yield  =  "Charge" + Mark-up Discounted
Manufactureto Delay Payment for 1 year  /  Debt Liability
It is also the rate at which
/ servicesthe amount owed must rise to delay payment for 1 Cash
Flow
year.

Based also Include Discounts

If we consider the on
value of the original/ Benefits
Volume payment presently due to be $P, and the
debtor wants to delay the payment for/ Returns
production t years, then an r% Market Rate of
Return on a similar Investment Assets means the "Future Value" of $P is $P *
(1 + r%)t  and the "Discount" would
Sales be calculated as
Achievement
Discount = $P * (1+r%)t - $P  where r% is also the "Discount Yield".
Discounted
If $F is a payment that will be made t years in the future, then the "Present
Cash
Value" of this Payment, also called
Paymentthe "Discounted Value" of the payment, is
recieve Flow
$P = $F / (1+r%)t    .