IBPS & SBI SPECIALIST OFFICER LAW LEGAL OFFICER STUDY MATERIAL ON DISSOLUTION OF A PARTNERSHIP FIRM BY TSA

DISSOLUTION OF A PARTNERSHIP FIRM




INTRODUCTION

When the business of the firm is closed down and the relation of partners comes to an end, the firm is said to have been dissolved. There is a distinction between the dissolution of partnership and dissolution of firm. When one or more partners sever their connections with the firm but the remaining partners continue to carry on business, it is the dissolution of partnership. But when there is a complete breakdown of relations among all the partners and the business is closed down, it is termed as dissolution lf the firm, in this chapter; we shall deal with accounts of the relationship when the firm is dissolved.
v  DISSOLUTION OF PARTNERSHIP AND FIRM:

At this stage, let us make clear the meaning of “Dissolution of firm” and “Dissolution of Partnership”. According to Section 39 of the Indian partnership Act, “The dissolution of Partnership between all the partners of a firm is called the dissolution of firm.” Thus dissolution of the firm means the complete and total cessation of legal relations amongst all partners in dissolution of firms, the business of partnership is closed and after payment of all liabilities, the capital is returned to partners.
But in case of retirement, death or insolvency of a partner, if the remaining partners continue the old business of the firm, there is dissolution of partnership. In this case the firm is not dissolved but, only firm is re-constituted, In short, dissolution of partnership does not necessarily involve the dissolution of firm but dissolution of firm is necessary involves dissolution of partnership.
v  CIRCUMSTANCES OF DISSOLUTION:  The dissolution of partnership takes place under the following circumstances.
a)      When the firm was constituted for a fixed term, on the expiry of that term.
b)      On the completion of particular venture, if constituted for a purpose.
c)       On the death of a partner.
d)      On the insolvency of a partner.
e)      On the retirement of a partner.
A firm is dissolved under the following circumstances:
(1)    When all the partners agree to dissolve the firm.
(2)    When all the partners of all partners except one are declared insolvent.
(3)    When all business of the firm becomes unlawful.
(4)    When the partnership is at will, on any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
(5)    When the court orders the dissolution of the firm.
Under the following circumstances, the court will order the dissolution of the firm.
(a)    When a partner becomes of unsound mind.
(b)   When a partner has become permanently incapable of performing duties
(c)    When a partner is guilty of misconduct which is likely to affect business.
(d)   When a partner persistently commits breach of partnership agreement
(e)   When a partner has transferred whole of his interest in the firm to a third party
(f)     When the business cannot be carried on except at a loss.
(g)    On any other ground which appears to the court just and equitable.
v  MODE OF SETTLEMENT OF ACCOUNTS:
When a firm is dissolved, the assets are sold off and out of the proceeds the liabilities of the firm are paid off, then the surplus is applied in payment of partner’s loan, if any. Finally, the capital of the partners is returned. When there is an agreement among the partners as to the way in which the accounts are to be settled, the accounts should be settled accordingly. If there is not such agreement, the provision of sec. 48 of the Indian Partnership Act, 1932 applies. The said provisions are as follows:
                In settling the accounts of a firm after dissolution, the following rules shall be observed, subject to agreement by the partners:
a)      Losses including deficiencies of capital shall be paid first out off profits, next out of capital and lastly, if necessary by the partners individually in the proportion in which they were entitled to share profits.
b)      The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:
1)      In the paying the debts of the firm to third parties.
2)      In paying to each partner ratably what is due to him from the firm for advances as distinguished from capital.
3)      In paying to each partner ratably what is due him on account of capital, and
4)      The residue, if any, shall be divided among the partners in the proportion in which they were entitled to share point.
v  STEPS TO BE TAKEN ON DISSOLUTION:
The above provisions of the partnership Act suggest the following steps to be taken on dissolution of the firm.
1)      All the assets of the firm, including goodwill are sold or disposed off in any other way (E.g. a partner may take over an asset)
2)      The amount so realized is applied in paying off third party liabilities in the first balance.
3)      If any one or more partners have advanced loan to the firm in addition to his capital, then these loan are repaid next after repayment of third party liabilities.
4)      Now, partners will ne paid what is due to them on capital accounts. If the surplus is not enough to return the full amount of capital, then the partner are paid ratably
5)      Surplus, if any, left after returning capitals is paid to the partners in their profit sharing ratio.
Firm debts and private Debts: The liability of partners is unlimited, in the sense that the private property of the partners can also be utilized for payment of rim’s debts. But, according to partnership Act, private property of any partner must be utilized first in payment of partner’s private debts. Similarly, firm’s assets are first applied in payment of firm’s debts and if there is any surplus, then the share of a partner in the said surplus can be utilized in payment of the private debts.
v  ENTRIES ON DISSOLUTION RELIZATION ACCOINT:
On dissolution of a firm, books of account are closed. For this purpose all assets of the firm are disposed off and liabilities paid off. For closing the account of assets and liabilities, the ‘Realization Account’ is opened. All the assets and liabilities are transferred to this account.
                In case of admission or retirement of a partner, Profit and loss account is opened to record the increase and decrease in the value of asset and liabilities. Realization account is not necessary in this case as the business is to continue and assets are not to be disposed off. The book values of assets and liabilities are transferred to realization account, as these accounts are to be closed. Assets have debit balances, hence they are credited in order to close those account and are shown on debit side of realization account. Similarly, liabilities have credit balances and they are debited to close them and are transferred to the credit of realization account.
ENTERIES ON DISSOLUTION
TRANSACTION
A/C TO BE DEBITED
A/C TO BE CREDITED
1.       Closing account of assets
2.       Closing account liabilities
3.       On sale of assets
4.       On payments of liabilities
5.       On payment of dissolution exp.
6.       Distributing realization profit
7.       On payment of partner’s loan
8.       Distributing General Reserve
9.       Settling partners Cap.(Dr.)
10.   Returning  capitals to partners
Realization A/c Dr
Liabilities A/c Dr
Cash/Bank A/c Dr
Realization A/c Dr
Realization A/c Dr
Realization A/c Dr
Partner’s loan A/c Dr
General reserve A/c Dr
Cash/Bank A/c Dr
Partner’s capital A/c Dr
Assets A/c Cr.
Realization A/c Cr.
Realization A/c Cr.
Cash/Bank A/c Cr.
Cash/bank A/c Cr.
Partner’s Capital A/c Cr.
Cash/Bank A/c Cr.
Partner’s capital A/c Cr.
Partner’s capital A/c Cr.
Cash/Bank A/c Cr.
 Remember that while solving the example. All the balance given in the B/s must be transferred to following four accounts.
1)      Realization account
2)      Partner’s capital account
3)      Cash/Bank Account
4)      Partner’s Loan A/c (if any)
REALIZATION ACCOUNT
PARTICULAR
Rs.
PARTICULAR
Rs.
To sundry assets (Entry no.1)….
         Land and building                ….
        Plant and machinery           ….
         Stock                                         ….
         Debtors
To Cash/Bank
          Payment of liabilities         ….
         (Entry no 4A)                         ….
          Creditors                                ….
          Bills payable                          ….
          Contingent liabilities.
To partner’s Capital A/c
         Liabilities taken over
         (entry no. 4B)
To cash Account
          Dissolution exps.               …..
          (entry no 5)
To balance being profit transferred to partner’s capital A/c
         (Entry no. 6A)
…………..
……………
…….
……………
By sundry liabilities
(entry 2)
                        Creditors                   ….
                     Bills payable                ….
                      Bank drafts                 ….
By Cash/Bank
Sales proceeds of Assets
                 (Entry 4)
Land and building           ….
Plant and machinery     ….
By Partners Capital Account
Assets taken over          ….
(Entry No.3B)
By Balance being loss transformed to partners capital account
(entry no.6B)
.............
…………….
…………….
……………
……………
........................
Generally the expenses are paid by the firm. The same is debited to realization account and credited to Cash Account
1)      At times, one of the partners may agree to bear the expenses. In such case, if the firm pays the expenses, it should be debited to capital account of the said partner and not to the realization account; the corresponding credit being given to cash Account.
2)      If the partner undertakes to bear the expenses. And when he pays the expenses, there should be no entry in the firm’s books.
3)      It may be agreed upon among the partners that one of them will be paid a fixed remuneration for attending to the dissolution work, but he is required to bear the dissolution expenses. In such a circumstance, the fixed remuneration is debited to Realization Account and credited to his Capital account. No entry is made in the firm’s book when he (partner) pays the realization expenses.
v  GOOD WILL ON DISSOLUTION:

Treatment of goodwill is similar to that of other assets on dissolution
1)      When goodwill appears in the B/s on the date of dissolution, it should be transferred to the debit side of realization account. Any Amount realized on sale of goodwill should then be credited of realization account like any other asset. If nothing is realized, from goodwill; naturally no entry is made in the realization Account for its realization.
2)      If goodwill does not appear in the books, the question of transferring to the debit side of realization account does not arise. When some thing is realized on sale of unrecorded goodwill, it should be credited to Realization account which is ultimately transferred to the credit side of the partner’s Capital Accounts. Thus, partners get the benefit of goodwill.
TO BUY ONLINE STUDY MATERIAL VISIT HERE

IBPS & SBI SPECIALIST OFFICER HR STUDY MATERIAL ON HUMAN RESOURCE PLANNING BY TSA


Human resource planning is vital function in organizations which is performed to make certain that they have the appropriate and the right kind of people at proper place and at the right time. It assists managers to reduce ambiguity and equip them to adjust with technological, social, authoritarian and environmental change. Effective human resource planning is a process of analysing an organization’s human resource needs under changing conditions and developing the activities necessary to gratify these needs (Biswajeet 2010). The basic intent of human resource planning is to make best use of the Human Resources and make certain their ongoing development, to secure the Production Capacity required to support Organizational objectives, to coordinate human resources activities with the organizational objectives and to enhance the organization’s productivity.

If Human resource team do this process effectively, it can lead to huge success of companies. Fajana (2002) stated that Human resource planning is the systematic and continual process of analysing organization’s human resource needs under mutating conditions and developing personnel policies appropriate for long-term effectiveness of the organization. It is an essential part of business planning and budgeting procedures since, human resource costs and forecasts both influence and are affected by longer term corporate plans. Quoting Mondy et (1996) explained planning as a systematic analysis of human resource needs in order to ensure that correct number of employees with the necessary skills are available when they are required. Planning involves the forecasting of human resource requirements in organizations and developing appropriate actions such as recruitment, training and career development based on identified needs. Planning is performed within the goals and general policy framework of the firm or organization. It is also impacted by public policies, transformations in technology and availability of manpower. Human resource planning will be triumphant to the extent that it accurately coordinates each of specified elements and it is basically organizing proper resources to business needs in the longer term or short term goal of company.
In order to make effective human resource planning in the long term, there are procedures to be followed by an organization which guarantees that it has the right number and kind of people at the right place and time to accomplish its objectives. Employers need to observe the attraction and retention of employees as a part of the employment relationship based on a mutual understanding of expectations as well as make effort to foresee how a potential employee might behave in future and make a contribution to the organization’s needs (Newill and Shackleton, 2000). Forecasting of future manpower requirement is the most significant part of manpower planning. It is performed on the basis of production and sales budgets, work load analysis, work force analysis, estimated absenteeism and turnover.
Figure: Human resource Planning Process HR Planning
The future manpower requirements should be forecasted quantitatively and qualitatively. There are several factors which must be considered before forecasting. Employment Trend is major factor in forecasting manpower. The manpower planning committee must compare and analyse the trend of last five year to forecast manpower requirements. Productivity also impact manpower requirements. Major features in productivity are better utilization of existing manpower, improvement in technology and matching of skills with job requirement. In human resource planning, absenteeism is a situation when a person could not attend the office when he is scheduled to work. While estimating demand for manpower the prevailing rate of absenteeism in the organisation should be considered. Expansion and growth plans of the organisation should be vigilantly analysed to judge their impact on manpower requirement in future. After forecasting about suitable candidates required, the next stage is to plan, how the organisation can obtain these people. Programmers and strategies must be developed for recruitment, selection, training, internal transfers, promotions and appraisal so that the future manpower requirement are fulfilled. Management experts emphasizes that development plans must be designed to ensure a continuing supply of trained people to take over jobs as they fall vacant either by promotion or recruitment or through training. In this way, shortages can be avoided in the long run. A major issue in manpower forecasting is accuracy of forecasts. If the forecast are not precise, planning will not be accurate. Inaccuracy increases when departmental forecasts are just prepared without critical review. There is another issue of identity crisis. Many human resource managers do not understand the whole manpower planning process. This creates an identity crisis. Other problem in manpower forecasting is resistance from Employees. Employees and trade unions resist manpower planning. They believe that this planning increases their overall workload and regulates them through productivity bargaining. They also feel that it would lead to unemployment. Usefulness of the planning depends upon the dependability of the information system. In majority of Indian industries, human resource information system has not well developed. In the absence of reliable data, it is possible to do effective planning. Many professionals stated that Manpower planning is an expensive and time consuming process. Employers may resist manpower planning because it will increase the cost of manpower.
Another planning process is succession planning in which senior executives review their top executives and lower level officers to determine several backups for each senior position. Succession planning is the methodical process of defining future management requirements and identifying candidates who best meet those requirements. Succession planning involves using the supply of labour within the organization for future employment needs. With succession planning, the skills and abilities of existing employees are assessed to perceive which future positions they may take within the organization when other employees leave their positions. Organization needs to create pool of candidates with high leadership potential.
Succession planning provides specific relation to business and strategic planning. A formal succession plan also offers a framework that allows companies to institute mentorship and training programs. Such programs offer future business leaders the opportunity to learn about and ideally emulate the traits and habits that leads to business success. The objective of succession planning is to promote individuals within the organization and thus makes use of internal selection. Succession planning is typically useful to the organization in its human resource planning, and when done properly, can be beneficial to organizational performance. Though there are many benefits of succession planning, theorists observed possible problems associated with the use of succession planning such as the crowned prince syndrome, the talent drain, and difficulties associated with managing large amounts of human resources information. To implement succession planning model, it is necessary to determine resource needs for implementation, identify barriers to implementation, update or develop job descriptions, Prepare organization for change, Establish communication plan, Connect with stakeholders and get their buy in, Identify and establish peer and leadership champions of change, If needed, implement strategies on pilot basis, Link succession strategies with HR, Recognition, Workforce planning, Assessment strategies, Recruitment strategies, Train staff as necessary.
Figure: Succession planning model Management Notes Civil Service Aspirants

Failure of HR Planning:

According to deep analysis of HR Planning, it is said that poor HR planning and lack of it in the Organization may increase cost and there will be financial deficit. It may result in filling post of needed people. This increases costs and impedes effective work performance because employees are requested to work needless overtime and may not put more effort due to exhaustion. Employees are put on a disadvantage because their live programmes are disrupted and they are not given the chance to plan for their career development. When there is staff scarcity, the organization should not just appoint discriminately, because of the costs implications of the other options, such as training and transferring of staff have to be considered.
To summarize, Human resource planning meet the objectives of manpower requirement. It assists to organize the recruited resources for the productive activities. Basically, human resource planning intended to gather information, making objectives, and making decisions to enable the organization achieve its objectives. Human resource planning provides information about how many people will be needed, what skills, knowledge and competencies will they require, will existing human resource meet the identified needs, is further training and development needed and is recruitment necessary. The human resource planning is vital process to link business strategy and its operation. It identifies the skill requirements for various levels of jobs.


 TO BUY ONLINE STUDY MATERIAL VISIT HERE

IBPS & SBI SPECIALIST OFFICER MARKETING STUDY MATERIAL ON MARKETING SEGMENTATION, TARGETING AND POSITIONING BY TSA

MARKETING SEGMENTATION, TARGETING AND POSITIONING



MARKET SEGMENTATION
 Introduction
Markets consist of buyers who differ in one or more respects. They may differ in their wants, resources, geographical locations, attitudes and buying practices. It is therefore necessary for a marketer to segment his/her market.
Meaning of Market Segmentation
The process of grouping customers in markets with some heterogeneity into smaller , more similar or homogeneous segments. The identification of target customers groups in which customer groups in which customers are aggregated into groups with similar requirements and buying characteristics.
Market segment – A group of individuals, groups or organizations sharing one or more similar characteristics that cause them to have relatively similar product needs and buying characteristics.
Benefits of Market Segmentation
There are a number of reasons organizations undertake segmentation 
v  Products are designed to be responsive to the needs of the marketplace. – segmenting markets facilitates a better understanding of customer’s needs, wants and other characteristics. The sharper focus that segmentation offers, allows those personal, situational and behavioral factors that characterize customers in a particular segment can be considered. By being closely in touch with segments, marketers can respond quickly to even the slight changes in what target customers want. i.e by monitoring the trends towards healthier eating and lifestyles, Mc Donald’s was able to respond by respond by introducing a wider range of salads and healthy eating options – including grilled chicken, fruit and yoghurt on to  its menus.
v  Increase profits – different consumer segments react in contrasting ways to prices, some are far less price sensitive than others. Segmentation allows an organization to gain from the best price it can in every segment, effectively raising the average price and increasing profitability.
v  Effective Resource Allocation - organizations are more capable of making products that customers want and can afford.
v  There is product differentiation – Various products are made to meet the needs of each customer segment.
Requirements of Good Market Segments
In addition to having different needs, for segments to be practical they should be evaluated against the following criteria:
*            Identifiable -The marketer should be able to identify which consumers are members of a particular market segment. The consumers in the segment should respond in the same way to a particular marketing mix. There must be some common characteristics that the consumers have.
*            Measurable - The characteristics that are common to the groups of consumers should be measured in terms of size, purchasing power and other characteristics.
*            Substantial -The segment should be large enough to generate sales volume that ensures profitability; otherwise it will not be economical to design a unique marketing mix for it. Is the market worth the effort?
*         Accessible: the segments must be reachable through communication and distribution channels.
*            Durable: the segments should be relatively stable to minimize the cost of frequent changes.
*            Responsive - Market segments must be defined in their willingness to purchase a product in response to variations in the marketing mix.
*            Compatible with corporate image -The market must be compatible with the firm’s objectives and corporate image.
A good market segmentation will result in segment members that are internally homogenous and externally heterogeneous; that is, as similar as possible within the segment, and as different as possible between segments.
Steps in the Market Segmentation, Targeting and Positioning.
Variables / Bases For Segmenting Consumer Markets
The following variables are commonly used to segment consumer markets.
1)            Geographic segmentation -This calls for dividing the market into different geographical units such as Nations, States, Regions – West, North, Central, South, e.t.c.
        - Countries, Cities or Neighborhoods
Attention should be paid to variations in geographical needs and preferences.
Geographical segmentation assists the seller to position retail outlets in most appropriate locations as well as simply identifying the needs on the basis of the consumers own location.
2)            Demographic segmentation -This consists of dividing the market into groups on the basis of demographic variables such as:- Age, sex, family size, family life cycle, income, education, occupation, religion, race and nationality.
These variables are the most popular for distinguishing customer groups because,
-          Consumers’ wants and preferences are closely related to them.
-          They are easier to measure than most other types of variables.
a)      Age -Consumer needs and wants change with age. Hence the market should be segmented as young, old, e.t.c.
b)     Gender -This can be employed to segment such markets for clothes deodorants, lotions, magazines, e.t.c. Thus the markets can be for either men or women, male or female
c)      Family life cycle (FLC) -The product needs for a household vary according to marital status and the present ages of children. Thus family life cycle can be divided into:-
-          Single,
-          Young, married with no children,
-          Young, married with young children,
-          Older married with children, e.t.c.
d)     Income -Marketers can segment the market according to the distribution of income e.g. under 1000 shillings per month, 2000/=, 4000/= per month, e.t.c.
e)      Occupation -Variables include; bankers, teachers, farmers, clerks, students, housewives, secretaries, e.t.c. A marketer can choose to specialize in the needs of one occupation group.
f)       Education - Some primary education, Some high school education, College education
-          University education e.t.c.
g)      Religion - e.g. Muslims, Christians e.t.c.
h)     Race - e.g. white, black e.t.c.
                          i.                  Nationality – e.g. Asians, Africans e.t.c.
                        ii.                   Social class  -Social class has a strong influence on people’s preferences,
Marketers designing products and/or services for specific social classes build in those features that appeal to the target social class.
i)        Ethnic  groups
j)       Generation - Consumer is profoundly influenced by the generation in which it grows up. This influences one’s inclination to Music, politics, e.t.c.
3)            Psychographic segmentation -Psychographics are psychological profiles of different consumers developed from research, sometimes referred to as A.I.O. (Attitudes, interests and opinion profiles)
In psychographic segmentation, buyers are divided into different groups on the basis of their:- Motives, Lifestyle and/or Personality characteristics.
People within the same demographic group can exhibit very different psychographic profiles.
Consumers can thus be sub-divided on the basis of the following psychographic variables.
                          i.                  Lifestyle -Consumers’ lifestyles are derived from their activities, interests and opinions. Each life style group is influenced by different marketing mixes.
                        ii.                  Personality  -Type of personality groups may include;
-          Authoritarian
-          Ambitious
-          Assertive
-          Self-confident
-          Prestige conscious
-          Extrovert/Introvert
4)            Behavioral segmentation -Buyers are divided into groups in the basis of their,
Knowledge, Attitude, Use or Response to a product.
In this respect, behavioral variables that are used to segment consumer markets include:-
i)              Occasions benefits -Buyers can be distinguished according to occasions when they
-          Purchase a product or
-          Use a product
E.g. Occasions when public transport is used mostly. Occasion   segmentation can help firms expand product usage.
ii)            Benefits -Buyers are classified according to different benefits they seek from the product. Variables here include:-
-          Economy (Low price)
-          Medical (Decay prevention)
-          Bright teeth
-          Good taste, e.t.c. for toothpaste.
Benefit segmentation requires determination of:-
-          The major benefits that people seek from the product
-          The kind of people who look for such benefit
-          The major brands that deliver each benefit.
iii)          User status -Many markets can be segmented into
-          Non-users.
-          Ex-users,
-          Potential users,
-          First time users and
-          Regular users of a product
All these people require different marketing approaches.
iv)          Usage rate -Markets can be segmented into
-          Light,
-          Medium and
-          Heavy user group of products.
v)            Loyalty status -A market can be segmented by customer loyalty patterns.
According to the loyalty status, the buyers can be divided into:-
-          Hard core loyals – Consumers who buy one brand all the time
-          Soft core loyals – Consumers who are loyal to two or three brands
-          Shifting loyals – Consumers who shift from favoring one brand to another.
-          Switchers – Consumers who show no loyalty to any brand
A company should
-          Study the characteristics of its hard-core customers e.g. whether middle class, larger families, e.t.c.
-          By studying soft-core loyals, the company can pinpoint which brands are most competitive with its own.
-          By looking at customers who are shifting away from its brands, a company can learn about its marketing weaknesses.
-          The company should be aware that what appears to be brand loyalty purchase may reflect.
§  Habits,
§  Indifference,
§  A low price or
§  Non-availability of other brands.
vi)          Buyer readiness stage -At any given time, people are in different stages of readiness to buy a product;
-          Some people are aware,
-          Some are informed,
-          Some are interested,
-          Some are desirous of buying,
-          Some intend to buy.
All these make a big difference in designing the marketing programme.
vii)        Attitude -People in a market can be classified according to their degree of enthusiasm for a product.
Five attitude classes can be distinguished e.g.
-          Enthusiastic,
-          Positive,
-          Indifferent,
-          Negative and
-          Hostile.
viii)      Volume segmentation -Involves grouping businesses by size and Purchase patterns
Variables for Segmenting Industrial / Business Markets
Industrial markets can be segmented using the same variables for consumer markets e.g. geographic, demographic and behavioral. Other variables that may be used include volume segments.
1)            Demographic
§  Industry – Which industries should we serve?
§  Company size –Which size companies should we serve?
§  Location – What geographic areas should we focus on?
2)            Operating variables
§  Technology – What customer technologies should we focus on?
§  User-non-user status – Should we focus on heavy, medium, light users or non-users?
§  Business capabilities – Should we serve business needing many or few services?
3)            Purchasing approaches
§  Nature of existing relationship.- Should we serve companies with which we have strong relationships or simply go after the most desirable companies?
§  Power structure – Should we serve companies that are engineering dominated, financially dominated,? E.t.c.
§  Purchasing criteria i.e. focus on quality, price, service  e.t.c.
4)            Situational factors
§  Urgency – Should we serve companies that need quick and sudden delivery or service
§  Specific application: Should we focus on certain applications of our product rather than all applications.
§  Size of order.- Should we focus on large or small orders.
5)            Personal characteristics
§  Buyer-seller similarity – Should we focus on companies whose people and values are similar to ours?
§  Attitude towards risk – Should we focus on risk takers or risk avoiding customers?
§  Loyalty – Should we focus on companies that show high loyalty to their suppliers?

Market Targeting

This is the evaluation of the various segments identified during segmentation and deciding how many and which ones to serve.
Evaluating The Market Segments
In evaluating different market segments, the firm must look at the following factors
1)      Segment size and growth
§  Marketing segment has to be ‘right size’. Size can be measured in terms of sales volume.
§  Companies should not only concentrate on sales volume but also on the growth potential of the segment.
2)      Segments structural attractiveness – Using Porter’s Five Forces Analysis.
A segment might have desirable size and growth characteristics and still not profitable.
             The company should evaluate the long-run profitability of the market segment.
Michael Porter has identified five forces that determine the intensive long-run attractiveness of the whole market or any other segment within it. These five forces are:-
§  Threat of intense segment rivalry -A segment is unattractive if it already contains strong or aggressive competitors.
§  Threat of new entrants -A segment is unattractive if it is likely to attract new competitors who will bring in new capacity, substantial resources and a drive for market share growth.
§  Threats of substitute products -A segment is unattractive if there exists actual or potential substitutes for the product.
§  Threats of growing bargaining powers of buyers -A segment is unattractive if the buyer’s posses strong or increasing bargaining power. Interested in low prices but high quality.
§  Threat of growing bargaining power and suppliers -A segment is unattractive if the suppliers posses a strong or increasing bargaining power. They can raise prices or reduce the quality and quantity of products and services offered.
-          Even if the segment has positive size and growth and it is attractive, the company has to consider its own objectives and resources.
-          The segment can be dismissed because it does not fit in the company’s long-run objectives.
-          Even if segments fit the company’s objectives, it must consider whether it has the required skills and resources to succeed in that segment.
3)      Segment interrelationships
Segments selected should be inter-related in terms of costs, performance and technology for effectiveness.
Target Market Strategies
There are several different target-market strategies that may be followed. Targeting strategies usually can be categorized as one of the following:
  • Single-segment strategy - also known as a concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single-segment approach often is the strategy of choice for smaller companies with limited resources.
 targeting          
  • Selective specialization- this is a multiple-segment strategy, also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different - in many cases only the promotional message or distribution channels vary.
  • Product specialization- the firm specializes in a particular product and tailors it to different market segments.
  • Market specialization- the firm specializes in serving a particular market segment and offers that segment an array of different products.
  • Full market coverage - the firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment.
              Undifferentiated marketing strategy
targeting
                         Differentiated  marketing
                          targeting
 With differentiated or multi-segment approach, the marketer targets a variety of different segments with a series of differentiated products. This is typical in the motor industry which has a variety of products such as diesel, four-wheel-drive, sports saloons, and so on.
A firm that is seeking to enter a market and grow should first target the most attractive segment that matches its capabilities. Once it gains a foothold, it can expand by pursuing a product specialization strategy, tailoring the product for different segments, or by pursuing a market specialization strategy and offering new products to its existing market segment.
Another strategy whose use is increasing is individual marketing, in which the marketing mix is tailored on an individual consumer basis. While in the past impractical, individual marketing is becoming more viable thanks to advances in technology.

Market Positioning

This is the act of designing a company’s offering and image to occupy a distinctive place in the target market’s mind. I.e. The act of creating a difference between a company’s offer from those of competitors.
Positioning is the process of establishing and maintaining a distinctive place in the market for the organizations’ product or brands. Positioning starts with the product, but positioning is not what you do to a product. Positioning is what you do to the mind of the customer. You should concentrate on the perception of the customer and not the reality of the product. Positioning then is how the product is perceived and evaluated by the target market, relative to competing products. To the consumer perception is reality. That is why it is said that a marketing battle is fought in the minds of consumers. Marketers who attain a superior position in customers’ minds have won the marketing battle.
A difference is worth establishing to the extent that it satisfies the following criteria.
1)            Important: - The difference delivers a highly valued benefit to a sufficient number of buyers.
2)            Distinctive:- The difference is delivered in a distinctive way
3)            Superior: The difference is superior to other ways of obtaining the benefit.
4)            Pre-emptive: The difference cannot be easily copied by competitors.
5)            Affordable - The buyer can afford to pay for the difference.
6)            Profitable - The Company will find in profitable to introduce the difference.

Positioning strategies:-

1)            Attribute positioning -A company positions itself on an attribute e.g. size, number of years in existence.
2)            Benefit positioning -The product is positioned as the leader in a certain benefit.
3)            Use or application positioning -Positioning a product as the best for some use or application.
4)            User positioning -Positioning a product the best for some user group e.g. Bic pen, food for consumption.
5)            Competitor positioning -The product claims to be better in some way then a named competitor.
6)            Product category positioning -The product is positioned as the leader in a certain product category
7)            Quality or price positioning. -The product is positioned as offering the best value
As companies increase their number of claims for their brands, they risk disbelief and loss of clear positioning. Companies must avoid four major positioning errors.
1.            Under Positioning -When buyers have only a vague idea of the brand
The brand is seen as just another entry in a crowded marketplace. E.g. When Pepsi introduced its clear crystal Pepsi in 1993 (U.S.A.) customers were distinctively unimpressed. They didn’t see ‘clarity’ as an important benefit of a soft drink.
2.            Over Positioning -Buyers may have too narrow a image of the brand. These buyers might think that suits at Sir Henry’s start at 15000/= when in fact it offers affordable suits started at 3000/=
3.            Confused Positioning -Buyers might have a confused image of the brand resulting from the company making too many claims or changing the brands positioning too frequently e.g. Omo, Zain
4.            Doubtful Positioning -Buyers might find it hard to believe the brand claims in view of the products features, price or manufacturers.
 
FOR STUDY MATERIAL OF IBPS & SBI SPECIALIST OFFICER MARKETING PLEASE CALL 09874581055/08961556195 OR EMAIL AT tamal253@yahoo.com