MARKETING CONTROLS

Marketing controls help monitor progress toward goals for customer satisfaction with products and services, prices, and delivery. The following are examples of controls used to evaluate an organization's marketing functions: Market research gathers data to assess customer needsinformation critical to an organization's success. Ongoing market research reflects how well an organization is meeting customers' expectations and helps anticipate customer needs. It also helps identify competitors. Test marketing is small-scale product marketing to assess customer acceptance. Using surveys and focus groups test marketing goes beyond identifying general requirements and looks at what (or who) actually influences buying decisions. Marketing statistics measure performance by compiling data and analyzing results. In most cases, competency with a computer spreadsheet program is all a manager needs. Managers look at marketing ratios, which measure profitability, activity, and market shares, as well as sales quotas, which measure progress toward sales goals and assist with inventory controls.

(1) CASE STUDY ON MARKET RESEARCH

Abstract: US-based FMCG major, Proctor and Gamble (P&G) is believed to have pioneered the marketing research concept way back in 1924. The case gives a brief account of the evolution and growth of P&G's marketing research efforts. The various marketing research tools used by the company are discussed in detail and several real life instances are narrated. The case also highlights the recent marketing research initiatives of P&G, including the thrust on online market research. The benefits to the company from its offline and online market research initiatives are also discussed. Issues: Understand the importance of marketing research for a large, global FMCG company. History In March 2003, Fortune magazine ranked Procter & Gamble (P&G), the world's leading fast moving consumer goods (FMCG) company, as #7 in the list of 'World's Most Admired Companies.'

P&G was one of the very few companies to have figured in this list for 17 consecutive years (1985-2002). P&G was ranked high on the parameter2 of 'ability to develop superior quality and highly innovative products on a consistent basis.' Analysts attributed this 'ability' to the company's understanding of consumers' needs and preferences that had evolved out of its continuous focus on marketing research (MR) from the very beginning. With the setting up of its MR department in 1924, P&G became one of the first companies in the world to conduct formal research on consumers' needs and preferences. Over the next eight decades, the company developed several innovative MR techniques. Its researchers were trained to get the information they required from consumers. P&G employed advanced technology to analyze the feedback it obtained and arrive at the right conclusions. Commending P&G's focus on , Tankut Turnaoglu, P&G's country manager in Kazakhstan, said, "P&G has a long history of success - a direct result of finding out what consumers want and developing superior-quality products to best meet their needs. P&G was among the first companies to establish in 1924 a special department for market research to identify consumer preferences and buying habits. Market research is still a foremost tool for understanding consumers' needs for P&G."3 P&G used qualitative research tools, such as focus groups, in-house visits, in-context visits and instore interviews, and quantitative research tools like blind tests, concept tests, and so on. The company also hired external agencies to conduct MR. In recent years, P&G used the Internet as a medium for research and, in the process, achieved significant savings of cost and time. Commenting on the benefits of the Internet, Barbara B. Lindsey, director of P&G's consumer research services and new-technologies group, said, "It can save you a whole lot of time and a whole lot of money."4 It has also helped P&G to reduce its reliance on external research agencies. According to the 2001 figures,5 every year P&G spent an estimated $150 million on more than 6,000 surveys, half of which were conducted in the US. Commenting on the importance the company attached to MR, an employee in its market research department said, "They really believe in (research). They do not just do it as a routine thing; they do it with genuine interest in finding out. They're really curious. They believe in the results; then they act on (that belief). Background Note Procter & Gamble was established in 1837 when candle maker, William Procter and his brother-

in-law, soap maker, James Gamble merged their small businesses. They set up a shop in Cincinnati and nicknamed it "Porkopolis" because of its dependence on swine slaughterhouses. The shop made candles and soaps from the leftover fats. From its inception, P&G sought product response from consumers in the form of complaints or suggestions. This feedback was given serious attention and the company incorporated the required changes. In one particular instance, in 1879, an 'Ivory' brand soap machine operator discovered that due to over-stirring, the soap floated on water. The consignment of Ivory 'floating soaps' was dispatched soon. P&G received appreciative comments from consumers and within a month, it had modified its production process so that the entire range of its 'Ivory' brand soap had this unique feature. Marketing Research Tools Used by P&G
P&G employed market researchers for every product division. The company also had two independent in-house research groups which were responsible for advertising research and market testing.

Quantitative Research Tools

P&G also employed quantitative research tools extensively. These tools helped in generating new product ideas for P&G. While the sample sizes for quantitative research was usually larger, the personal interaction between the researchers and the respondents was minimal.

Conducting Marketing Research Online

P&G conducted online concept tests to get feedback from consumers. This feedback helped it in new product introduction and launching improved versions of existing products...

The Benefits
P&G's online MR surveys saved considerable time and costs for the company. Using traditional methods, a consumer survey cost the company around $50,000 and took at least three to four weeks...

(2) CASE STUDY ON MARKET RESEARCH

Abstract: This case examines the launch of New Coke by Coca-Cola in 1985 in an attempt to capture the market share from its closest competitor, Pepsi. It discusses the reasons why Coca-Cola changed its formula, the financial and marketing implications of introducing a new product that did not appeal to consumers and how this experiment backfired. The case explores the deep feelings of Coca-Cola lovers for the company, its product and brand. The case also provides information on how the launch of New Coke benefited Coca-Cola and how according to analysts, a marketing blunder turned out to be a marketing ploy. Issues:
Appreciate the factors that influence reformulating an established successful product.

Introduction On April 23, 1985, Coca-Cola, the largest aerated beverage manufacturer of the world, launched a sweeter version of the soft drink named 'New Coke,' withdrawing its traditional 99 years old formula. New Coke was launched with a lot of fanfare and was widely publicized through the television and newspapers. Coca-Cola's decision to change Coke's formulation was one of the most significant developments in the soft drink industry during that time. Though the initial market response to New Coke was satisfactory, things soon went against Coca-Cola. Most people who liked the original Coke criticized Coca-Cola's decision to change its formula. They had realized that the taste of New Coke was similar to that of Pepsi, Coca-Cola's closest competitor, and was too poor when compared to the taste of the original Coke. Analysts felt that Coca-Cola had failed to understand the emotional attachment of consumers with Coke - the brand. They felt that Coca-Cola had lost customer goodwill by replacing a popular product by a new one that disappointed the consumers. As a result of consumer protests to New Coke and a significant decline in its sales, Coca-Cola was forced to revert back to its original formula ten weeks later by launching 'Coke Classic' on July 11, 1985. Roger Enrico, the then CEO of Pepsi commented on the re-introduction of Old Coke in these words: "I think, by the end of their Coca-Cola nightmare, they figured out who they really are. They can't change the taste of their flagship brand. They can't change its imagery. All they can do is defend the heritage they nearly abandoned in 1985." By 1986, New Coke had a market share of less than 3%.

Background Note
Dr. John Pemberton, an Atlanta-based pharmacist, developed Coke's original formula in 1886. It was based on a combination of oils, extracts from coca leaves (cola nut) and various other additives including caffeine. These ingredients were refined to create a refreshing carbonated soda. Pemberton's bookkeeper, Frank Robinson, suggested that the product be named Coca-Cola. He also developed the lettering for the brand name in a distinctive flowing script. On May 8, 1886, Coke was released in the market. It was first sold by Joe Jacobs Drug Store in the U.S. The first advertisement of Coke appeared in 'The Atlanta Journal' dated May 29, 1886. Pemberton took the help of several investors and spent $76.96 on advertising. Initially, he could sell only 50 gallons of syrup at $1 per gallon. To make the drink popular, it was served free for several days - only after this that the drink gained people's acceptance. After Pemberton's death in 1888, Asa Candler, his friend and a wholesaler druggist, acquired a stake in the company. Coca-Cola's sales soared even without much advertising and as many as 61,000 servings (8 ounces) were sold in 1889. This made Candler realize that the business was profitable. He decided to wind up his drug business and be associated with Coca-Cola full time. As the business expanded, Candler also invested a higher sum in advertising the drink. By 1891, Candler bought the company for $2,300. In 1892, he renamed it as Coca-Cola and a year later, Coca-Cola was registered as a trademark. Only Candler and his associate Robinson knew the original formula. It was then passed on by word of mouth and became the 'most closely guarded secret in the American industry.' Though occasional rumors spread that cocaine was an ingredient of Coke's formula, authorities mentioned that this was not true. By 1895, Coke was made available in all parts of the US, primarily through distributors and fountain owners. oke was advertised as a drink, which relieved one of mental and physical exhaustion, and cured headache. Later, Candler and Robinson repositioned Coke as a refreshment drink. In the beginning of the 20th century, manufacturing firms in the US were criticized for promoting adulterated products and resorting to misleading advertisements.

The Rationale
Soon after becoming CEO, Goizueta concluded that the obsession about increasing the market share was futile for Coca-Cola and in certain businesses, the return on capital employed (ROCE) was actually less than the cost of capital. As a result, he sold Coca-Cola's non-performing businesses such as wine, coffee, tea, industrial water treatment and aquaculture.

The Launch and its Aftermath

Coca-Cola launched New Coke in April 1985 with the punch line 'Catch the wave.' This change in Coke's formula was publicized through the television and newspapers. The company said that the introduction of New Coke conformed to its efforts to be innovative in its marketing strategies and establish good customer relationships. The announcement reached more than 80% of the American population within twenty-four hours. The launch of New Coke elicited mixed reactions from the public.

New Coke - What Went Wrong?

Analysts attributed the failure of New Coke due to several factors. Some felt that Coca-Cola had failed to understand the consumers' emotional attachment with Coke. Reportedly, their attachment with the brand was so strong that one of them went to the extent of wishing his bones and ashes to be preserved in Coke cans after his death.

A Marketing Blunder or a Ploy?

Notwithstanding the negative consumers' response, some media reports claimed that Coca-Cola's act of launching New Coke was actually a deliberate marketing ploy to make people develop a stronger liking of original Coke after they tasted a low quality version of the drink. Coca-Cola used cane sugar and corn syrup for the sweet taste of New Coke. During early 1985, CocaCola ran short of cane sugar stocks, but had sufficient stocks of corn syrup. Cane sugar was sweeter and more expensive than corn syrup.

FINANCIAL CONTROLS
After the organization has strategies in place to reach its goals, funds are set aside for the necessary resources and labor. As money is spent, statements are updated to reflect how much was spent, how it was spent, and what it obtained. Managers use these financial statements, such as an income statement or balance sheet, to monitor the progress of programs and plans. Financial statements provide management with information to monitor financial resources and activities. The income statement shows the results of the organization's operations over a period of time, such as revenues, expenses, and profit or loss. The balance sheet shows what the organization is worth (assets) at a single point in time, and the extent to which those assets were financed through debt (liabilities) or owner's investment (equity).
Financial audits, or formal investigations, are regularly conducted to ensure that financial management practices follow generally accepted procedures, policies, laws, and ethical guidelines. Audits may be conducted internally or externally.

Financial ratio analysis examines the relationship between specific figures on the financial statements and helps explain the significance of those figures: 1. 2. 3. 4. 5. Liquidity ratios measure an organization's ability to generate cash. Profitability ratios measure an organization's ability to generate profits. Debt ratios measure an organization's ability to pay its debts. Activity ratios measure an organization's efficiency in operations and use of assets. Budget controls A budget depicts how much an organization expects to spend (expenses) and earn (revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep track of their overall spending.

A budget depicts how much an organization expects to spend (expenses) and earn (revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep track of their overall spending.

1.

A budget depicts how much an organization expects to spend (expenses) and earn (revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep track of their overall spending. Top-down budgeting. Managers prepare the budget and send it to subordinates. Bottom-up budgeting. Figures come from the lower levels and are adjusted and coordinated as they move up the hierarchy. Zero-based budgeting. Managers develop each new budget by justifying the projected allocation against its contribution to departmental or organizational goals. Flexible budgeting. Any budget exercise can incorporate flexible budgets, which set meet or beat standards that can be compared to expenditures.

2. 3.

4.

5.

1. Financial Statement
All business organizations prepare Profit and Loss Account. It gives a summary of the income and expenses for a specified period. They also prepare Balance Sheet, which shows the financial position of the organisation at the end of the specified period. Financial statements are used to control the organisation. The figures of the current year can be compared with the previous year's figures. They can also be compared with the figures of other similar organisations. Ratio analysis can be used to find out and analyse the financial statements. Ratio analysis helps to understand the profitability, liquidity and solvency position of the business.

2. Budgetary Control
A budget is a planning and controlling device. Budgetary control is a technique of managerial control through budgets. It is the essence of financial control. Budgetary control is done for all aspects of a business such as income, expenditure, production, capital and revenue. Budgetary control is done by the budget committee.

3. Break Even Analysis

Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g. When an organisation sells 50K cars it will break even. It means that, any sale below this point will cause losses and any sale above this point will earn profits. The Break-even analysis acts as a control device. It helps to find out the company's performance. So the company can take collective action to improve its performance in the future. Break-even analysis is a simple control tool.

4. Return on Investment (ROI)

Investment consists of fixed assets and working capital used in business. Profit on the investment is a reward for risk taking. If the ROI is high then the financial performance of a business is good and vice-versa. ROI is a tool to improve financial performance. It helps the business to compare its present performance with that of previous years' performance. It helps to conduct inter-firm comparisons. It also shows the areas where corrective actions are needed.

PRODUCTION CONTROL
In today's competitive world shorter product life cycles, customers rapid demands and quickly changing business environment is putting lot of pressures on manufacturers for quicker response and shorter cycle times. Now the manufacturers put pressures on their suppliers. One way to ensure quick turnaround is by holding inventory, but inventory costs can easily become prohibitive. A wiser approach is to make your production agile, able to adapt to changing customer demands. This can only be done by JUST IN TIME (JIT) philosophy. JIT is both a philosophy and collection of management methods and techniques used to eliminate waste (particularly inventory). Waste results from any activity that adds cost without adding value, such as moving and storing. Just-in-time (JIT) is a management philosophy that strives to eliminate sources of such manufacturing waste by producing the right part in the right place at the right time.

FEATURES
JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown). The basic elements of JIT manufacturing are people involvement, plants, and system. People involvement deal with maintaining a good support and agreement with the people involved in the production. This is not only to reduce the time and effort of implementation of JIT, but also to minimize the chance of creating implementation problems. The plant itself also has certain requirements that are needed to implement the JIT, and those are plant layout, demand pull production, Kanban, self-inspection, and continuous improvement. The plant layout mainly focuses on maximizing working flexibility. It requires the use of multi-function workers. Demand pull production is where you produce when the order is received. This allows for better management of quantity and time more appropriately. Kanban is a Japanese term for card or tag. This is where special inventory and process information are written on the card. This helps in tying and linking the process more efficiently. Self-inspection is where the workers on the line inspect products as they move along, this helps in catching mistakes

immediately. Lastly continuous improvement which is the most important concept of the JIT system. This simply asks the organization to improve its productivity, service, operation, and customer service in an on-going basis.
In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise. The target of JIT is to speed up customer response while minimizing inventories at the same time. Inventories help to response quickly to changing customer demands, but inevitably cost money and increase the needed working capital. JIT requires precision, as the right parts must arrive "just-in-time" at the right position (work station at the assembly line). It is used primarily for high-volume repetitive flow manufacturing processes.

CASE STUDY FOR PRODUCTION CONTROL HISTORY

The technique was first used by the Ford Motor Company as described explicitly by Henry Ford's My Life and Work (1922): "We have found in buying materials that it is not worthwhile to buy for other than immediate needs. They bought only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials. With bad transportation one has to carry larger stocks. They followed the concept of "dock to factory floor" in which incoming materials are not even stored or warehoused before going into production. This paragraph also shows the need for an effective freight management system (FMS) and Ford's Today and Tomorrow (1926) describes one. The technique was subsequently adopted and publicised by Toyota Motor Corporation of Japan as part of its Toyota Production System (TPS). Japanese corporations could afford large amounts of land to warehouse finished products and parts. Before the 1950s, this was thought to be a disadvantage because it reduced the economic lot size. (An economic lot size is the number of identical products that should be produced, given the cost of changing the production process over to another product.) The undesirable result was poor return on investment for a factory. Also at that time, Japanese companies had a bad reputation as far as quality of manufacturing and car manufacturing in particular was concerned. One motivated reason for developing JIT and some other better production techniques was that after World War II, Japanese people had a very strong incentive to develop a good manufacturing technique which would help them rebuild their economy. They also had a strong working ethic which

was concentrated on work rather than on leisure, and this kind of motivation was what drove Japanese economy to succeed. Therefore Japans wish to improve the quality of its production led to the worldwide launch of JIT method of inventory

TOYOTA MOTORS
The basic elements of JIT were developed by Toyota in the 1950's, and became known as the Toyota Production System (TPS).The chief engineer Taiichi Ohno, a former shop manager and eventually vice president of Toyota Motor Company at Toyota in the 1950s examined accounting assumptions and realized that another method was possible. The factory could be made more flexible, reducing the overhead costs of retooling and reducing the economic lot size to the available warehouse space. Over a period of several years, Toyota engineers redesigned car models for commonality of tooling for such production processes as paint-spraying and welding. Toyota was one of the first to apply flexible robotic systems for these tasks. Some of the changes were as simple as standardizing the hole sizes used to hang parts on hooks. The number and types of fasteners were reduced in order to standardize assembly steps and tools. In some cases, identical subassemblies could be used in several models. Toyota engineers then determined that the remaining critical bottleneck in the retooling process was the time required to change the stamping dies used for body parts. These were adjusted by hand, using crowbars and wrenches. It sometimes took as long as several days to install a large (multiton) die set and adjust it for acceptable quality. Further, these were usually installed one at a time by a team of experts, so that the line was down for several weeks. Toyota implemented a program called Single Minute Exchange of Die (SMED). With very simple fixtures, measurements were substituted for adjustments. Almost immediately, die change times fell to about half an hour. At the same time, quality of the stampings became controlled by a written recipe, reducing the skill required for the change. Analysis showed that the remaining time was used to search for hand tools and move dies. Procedural changes (such as moving the new die in place with the line in operation) and dedicated tool-racks reduced the die-change times to as little as 40 seconds. Dies were changed in a ripple through the factory as a new product began flowing. After SMED, economic lot sizes fell to as little as one vehicle in some Toyota plants. Carrying the process into parts-storage made it possible to store as little as one part in each assembly station. When a part disappeared, that was used as a signal to produce or order a replacement. JIT was firmly in place in numerous Japanese plants by the early 1970's. JIT began to be adopted in the U.S. in the 1980's.

REQUIREMENTS

JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again For Example Cars, Fast Food Chains

The requirements for a proper just-in-time management are:

STANDARDIZATION: Where the supplies are standardized and the suppliers are trustable and close to the plant. As there is little buffer inventory between the workstations, so the quality must be high and efforts are made to prevent machine breakdowns. Those organizations that need to respond to customer demands regularly this system is also being able to respond to changes in customer demands.
SOFTWARE: For JIT to work efficiently Supply Chain Planning software, companies have in the mean time extended Just-in-time manufacturing externally, by demanding from their suppliers to deliver inventory to the factory only when it's needed for assembly, making JIT manufacturing, ordering and delivery processes even speedier, more flexible and more efficient. MULTI-FUNCTIONALITY: In JIT workers are multifunctional and are required to perform different tasks. Machines are also multifunction and are arranged in small U-shaped work cells that enable parts to processed in a continuous flow through the cell. Workers produce pars one at a time within cells and transport those parts between cells in small lots. CLEANLINESS: Environment is kept clean and free of waste so that any unusual occurrence are visible. SCHEDULES: Schedules are prepared only for the final assembly line, in which several different models are assembled at the same line. Requirements for the component parts and subassemblies are then pulled through the system. The "PULL" element of JIT will not work unless production is uniform and lot sizes are low. Pull system is also used to order material from suppliers (fewer in numbers usually). They make be requested to make multiple deliveries of the same item in the same day, so the manufacturing system must be flexible. QUALITY: Quality within JIT manufacturing is necessary, because without a quality program in JIT, the JIT will fail. Here we think about quality at the source and the Plan, Do, Check, Action with its statistical process control. Furthermore, techniques are also very important. The JIT technique is a pull system rather than a pull system, based on not producing things until they are needed. The well known Kanban card is used as a signal to produce. Moreover, integration also plays a key role in JIT systems. JIT integration can be found in four points of the manufacturing firm. The Accounting side, Engineering side, Customer side and Supplier side. At the accounting side, JIT has concern for WIP, utilization and overhead allocation and at the engineering side of JIT focuses on simultaneously and participative design of products and processes.

HUMAN RESOURCE CONTROL

CASE STUDY