Priyadarshini College of Engineering, Nagpur

Subject:
Engineering Economics & Industrial Management

Unit 4-Notes

Topics covered:
 Definition, nature and scope of management
 Functions of management
 Meaning and concept of marketing management
 Marketing mix
 Channels of distribution
 Advertising and Sales Promotion

Complied by Prof. Prashika Meshram

Meaning of Management

Management is the process of planning and organizing the resources and activities of a business
to achieve specific goals in the most effective and efficient manner possible. Efficiency in
management refers to the completion of tasks correctly and at minimal costs. Effectiveness in
management relates to the completion of tasks within specific timelines to yield tangible
results.

Characteristics of Management:

1. Multi-dimensional:

Most management oversees and supervises a company or organization’s service or production

cycle. A manager considers a staff member both as an individual with diverse needs and as a
component of the larger group. To be effective, managers influence their team members to
apply their unique strengths toward achieving the organization’s goals.

2. Dynamic:

Management is a dynamic function and evolves and adapts to changes in its environment,
whether they are economic, socio-political or technological. Whether the company can still
survive depends on how effectively its management can adapt to new market requirements.

3. Intangible:

Management is not a tangible product, but its presence can change the way an organization
function. Management consists of ideologies, policies and human interaction. Good
management helps improve a company's target achievement ratios, employee gratification
levels and overall ease in the company's operation.

Nature of Management
The speed and effectiveness of an organization are increased when a group of employees are
identified who carry out specific tasks through management, which is a systematic procedure.
The key characteristics that illustrate the nature of management in companies are listed below:

1. Universality

Since management is common and important in all industries, it is universal. Whatever the
nature, location, or size of the organization, management techniques can be utilized in any
circumstance.

2. Social Process

Complied by Prof. Prashika Meshram

Managing involves interacting with a group of people. Different people have different levels
of energy, intelligence, and sensitivity that a manager must deal with. Maintaining, inspiring,
and growing staff members while also ensuring their social happiness are all parts of
management.

3. Purposeful

This always aims to fulfill the objectives and aims of the company. The degree to which
planned objectives are achieved serves as a barometer for managers.

4. Intangible

The nature of management is intangible. Although it is not something physical that you can
contact, you can sense its presence in the sufficient, well-organized work output and employee
happiness that are the results of its activities.

5. Coordinating Force

It avoids effort duplication by coordinating the efforts of organizational members through an

appropriate arrangement of similar operations.

6. Dynamic Function

Since companies are frequently impacted by financial, cultural, political, and technical issues,
management must be flexible at its foundation. People can function well even in stressful
settings if they have room for flexibility and adaptability.

7. Goal-Oriented

Every action taken during a management process is intended to achieve a specific objective.
They are all targeted at achieving particular goals.

8. Creativity

Management is a complex process made up of separate parts. Every separate element makes a
distinct contribution. For instance, group projects foster creativity and original thought.
Synergy is produced when individual efforts are joined, giving rise to something new.

Scope of management

1. Financial management

Financial management is a top priority for companies as the effective and proper managing of
finances enables them to stay in business and remain competitive. It is necessary for companies
to plan, organize, direct and control their financial activities to increase profit and reduce
wastage of resources.

2. Marketing management

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Marketing management usually covers the different marketing activities undertaken by the
company's marketing department. These may include identifying consumer trends and creating
appropriate business solutions to respond to them. The different functions of marketing
management typically include market research, financing, risk-taking, campaign planning,
customer outreach, loyalty programmers, lead generation and customer relationship
management.

3. Personnel management

Personnel management is about managing the personnel or staff in an organization and

maintaining a positive and productive business environment. It includes establishing effective
communication with the organization’s personnel, publishing company policies, implementing
health and safety practices, responding to grievances and taking disciplinary action when
necessary.

4. Production management

Production management is the application of management principles to the different production

activities in a company's production department. It usually involves handling the entire
manufacturing process and planning, organizing, overseeing and monitoring the production of
goods and services. In production management, the production manager is responsible for
procuring raw materials, hiring and assigning labour for different work activities, maintaining
equipment and creating production budgets. They also supervise work performance, oversee
research and development, ensure quality control and monitor delivery and storage of finished
products.

5. Office management

Office management concerns the planning, coordinating and controlling the different work
activities in an office environment. The aim of office management is to ensure the smooth and
efficient functioning of all office departments to get the necessary work done and achieve the
organization’s work targets and business goals. The primary functions of office management
are planning projects, hiring qualified employees, organizing and assigning work tasks,
directing and guiding project work and monitoring and controlling the work processes.

Importance of Management
According to Peter Drucker, “Management is the dynamic life giving element in every
organization. It is an activating force making the people ready to achieve the organizational
goal.” Thus without management, all other M’s like men, machines, money and material
remain useless. Hence it can be said that “Anything minus management is nothing”.
1. It makes optimum use of available resources: Management avoids wastages and
tries to ensure the optimum use of available resources. This is made possible by
putting the resources to their best uses to achieve the maximum results out of them.
Attempt is also made to develop a conducive and healthy climate to enable the
workers to put in their best effort to perform the best.

Complied by Prof. Prashika Meshram

 2. It leads and motivates employees in an effective and efficient manner:
Management by providing effective leadership and motivation to employees makes
them willingly work harder and better to achieve organizational goals and objectives.
It is the leadership and motivation that keep the organization moving towards success.

3. It establishes sound and cordial industrial relations: Establishment and

maintenance of industrial peace is an essential requirement for organizational
functioning and good performance. Due to harmonious balance between employee’s
interests and employers’ returns, management establishes peace and harmony in the
organizations.

4. It introduces change and brings growth: Because of continuous changing

environment, only those organizations survive that are able to adjust and adapt
changes.

Functions of Management

1. Planning
Planning is future-oriented and determines an organization’s direction. It is a rational
and systematic way of making decisions today that will affect the future of the
company. It is a kind of organized foresight as well as corrective hindsight. It involves
predicting of the future as well as attempting to control the events. It involves the ability
to foresee the effects of current actions in the long run in the future.
Peter Drucker has defined planning as follows:
“Planning is the continuous process of making present entrepreneurial decisions
systematically and with best possible knowledge of their futurity, organizing
systematically the efforts needed to carry out these decisions and measuring the results
of these decisions against the expectations through organized and systematic feedback”.

2. Organizing
Organizing requires a formal structure of authority and the direction and flow of such
authority through which work subdivisions are defined, arranged and coordinated so
that each part
relates to the other part in a united and coherent manner so as to attain the prescribed
objectives.
According to Henry Fayol, “To organize a business is to provide it with everything
useful or its functioning i.e. raw material, tools, capital and personnel’s”.

3. Staffing
Staffing is the function of hiring and retaining a suitable work-force for the enterprise
both at managerial as well as non-managerial levels. It involves the process of
recruiting, training, developing, compensating and evaluating employees and
maintaining this workforce with proper incentives and motivations. Since the human
element is the most vital factor in the process of management, it is important to recruit
the right personnel.
According to Kootz & O’Donnell, “Managerial function of staffing involves manning
the organization structure through the proper and effective selection, appraisal &
development of personnel to fill the roles designed in the structure”.

Complied by Prof. Prashika Meshram

 4. Directing
The directing function is concerned with leadership, communication, motivation, and
supervision so that the employees perform their activities in the most efficient manner
possible, in order to achieve the desired goals.
The leadership element involves issuing of instructions and guiding the subordinates
about procedures and methods.
The communication must be open both ways so that the information can be passed on
to the subordinates and the feedback received from them.

5. Controlling
The function of control consists of those activities that are undertaken to ensure that the
events do not deviate from the pre-arranged plans. The activities consist of establishing
standards for work performance, measuring performance and comparing it to these set
standards and taking corrective actions as and when needed, to correct any deviations.
According to Koontz & O’Donnell, “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise
objectives and plans desired to obtain them as being accomplished”.

Meaning concept of Marketing Management

Marketing

Marketing is the process of getting potential clients or customers interested in your products
and services.

Marketing Concept
The different marketing concepts have evolved gradually with the passage of time. The modern
marketing concept has come a long way from the production orientation to modern consumer
orientation. A brief resume of the different marketing concepts is given below.

1. Production oriented concept

The use of electricity, increased transportation facilities and division of labour

facilitated mechanization and large-scale production. The Industrial enterprises pursued
the aim of increasing the production and reducing cost. The production concept favored
mass production and reducing cost. The production concept favored mass production
and mass distribution. The goods were produced on a large scale and sold in the market
where there was enough demand. The limitation of this concept was that it failed to
consider and recognize what the consumer wanted. It was presumed by the
manufacturer that the demand for their product will continue.

2. Sales oriented concept

This concept believes in high sales volume to earn more profits. The firms believing in
this concept focused their attention on manufacturing large quantity of quality of

Complied by Prof. Prashika Meshram

 product and with the means of aggressive salesmanship, advertisement, branding,
packing of product style and other promotional efforts aimed at achieving profits
through sales volume. A substantial amount is spent on advertisements and other
promotional activities.

3. Marketing concept

The modern marketing concept is consumer oriented and follows integrated marketing
approach. This concept aims at finding out customer needs and wants and accordingly
the product is manufactured. The message of the concept according to Philip Kotler is
make what you can sell, instead of trying to sell what you can make. Love the customer
and not the product.

Marketing Management

R. S. Davar has defined marketing management as, the process of ascertaining consumer needs,
converting them into product or services and then moving the product or service to the final
consumer or user to satisfy such needs and wants of specific consumer segment or segments
with emphasis on profitability ensuring the optimum use of the resources available to the
organization.

Functions of Marketing Management

1. It has to fix the objectives to be achieved.

2. Market analysis on continuous basis has to be undertaken to increase sales volume.
3. Formulation of sales budget
4. The potential customers need and wants to be evaluated.
5. Marketing plans, procedures and policies are to be carefully determined in order to
serve the customer better.
6. To attain ci-ordination between the different constituent elements of the marketing mix
7. Selection of most effective marketing channel
8. To develop effective and smooth marketing communication
9. Market research should go on continuously.
10. There should be proper coordination and control of all marketing activities.

Marketing Mix

Marketing mix refers to the policy of the enterprise adopted to achieve success in marketing of
the product. The idea of marketing mix put forward by Neil Borden. According to him, The
marketing mix refers to the appointment of efforts, the combination, the designing and the
integration of the elements of marketing into a programmed or mix which, on the basis of an
appraisal of the market forces will best achieve an enterprise at a given time.

The marketing mix has four constituents’ elements. According to Stanton, “Marketing mix is
the term used to describe the combination of four inputs which constitute the core of a
company’s marketing system- the product, the price structure, the promotional activities and
the distribution system.”

Four Ps of Marketing

Complied by Prof. Prashika Meshram

 1. Product – Product is the first element of marketing mix. Product planning and its
development, manufacturing, packing, branding are the aspects which a manufacturer
has to consider and decide. Manufacturing of the product is done after fully knowing
the needs of the customer and assessing the demand for it in the market. Also, it must
be ascertained whether the product needs certain development as regards its quality,
shape, design, package, brand and style. All these decisions are to be taken before going
for production. Management must also decide on after sales service. The manufacturing
must gather all relevant information relating to the marketing of the product beforehand.
2. Price – Price is the second constituent’s element of marketing mix. The exchange value
of the product is price. The manufacturer has to fix the price of a product to be charged
to the dealer, wholesaler, retailer, and finally consumer. To increase sales of the product
manufacturer may charge reduced price or offer discount. All these decisions form a
policy on pricing of the product.
3. Promotion – Promotion is the third constituent element of the marketing mix. The
consumers should know the product available for them to satisfy their particular
demand. The efforts regarding this undertaken by the manufacturer are known as
promotion. The promotion activities include advertisements, personal selling, publicity,
etc. The purpose of these promotional efforts is to pursue the consumer and inform him
about these products, its quality and uses. The system is known as persuasive
communication.
4. Physical distribution – The physical distribution is the fourth and the last constituent
element of marketing mix. It deals with the choice of or from different marketing
channels, sales regions or marketing segments, location of market, transport and storage
facilities, etc. The elements of marketing mix are the tools in the hands of marketing
manager to fulfil the customers needs and deliver satisfaction to them and increase sales
of the firm.

Channels of Distribution

1. The channel of distribution is the path that product or services takes in order to be set
from the manufacturer to the consumer.
2. The place of production and consumption of products is not the same.
3. The distribution channel overcomes the place barrier in delivering the product.
4. It may be direct from the factory to consumer or through a series of middlemen such as
dealers, wholesalers, selling agents, retailers etc.
5. The marketing manager has to choose the most cost-effective channel where at
minimum cost and maximum sales be affected.
6. It is easier to sell the product through and nearly impossible in case of mass production
and mass consumption.
7. The channel of distribution is the link between producer and consumer.

Consumer Goods Distribution Channels

The common channels of distribution for consumers goods are as follows.

1) Direct channel

It is manufacturer to consumer channel. The Platform goods are directly sold to the
consumer through the manufacturer owned les stores, mail order sales, door to door sales
(through salesmen or salesgirls), retail shops of the manufacturer e.g. Corona shoes, textile

Complied by Prof. Prashika Meshram

mills showrooms. Under this system manufacturer is in direct contact with his consumers
and able to know their wants and desires thus facilitates two-way C-M flow of information.
This is the shortest route. Advertisement is required

2) Manufacturer - Retailer – Consumer

This type of channel has re a single intermediary i.e., retailer. The retail outlets exist in the
several forms as departmental stores, cooperative stores, supermarkets, mail-order houses,
sales depots etc. This system throws the function of wholesaler on to the manufacturer.

3) Manufacturer -Wholesaler -Retailer- Consumer

This is the most common channel used for distribution of many goods Cosmetics
pharmaceuticals, groceries are routed through this channel. Advertisement cover is required
to promote the products in the market. This system relieves the manufacturer from
performing the function of wholesaler.

4) Manufacturer-Agent Wholesaler - Retailer – Consumer

In this system of distribution channel the manufacturer distributes the product through sales
agent to the wholesalers and wholesalers pass the product to the consumers via retailers
Agents are common in marketing of agricultural products and some manufactured
commodities The entire marketing of the product is done by an agent.

5) Manufacturer-Agent-Retailer-Consumer

Under this channel the wholesaler's job is performed by the agent who is responsible for
distributing the product to the consumers through retailers.

6) Manufacturer -Wholesalers -Consumers

This system of distribution is in operation where the consumers are institutions like,
hospitals, government, universities or colleges, big business houses etc.

Industrial Goods Distribution Channels

The channels of distribution for industrial goods are different from consumer goods. This
channel has no retailers because industrial goods are purchased in large quantities. The
following are the channels of distribution for industrial goods.

1) Manufacturer -Consumer

There is a direct channel from producer to consumer. Consumers purchase the required
quantity of upon the type and characteristic features of the product. The product may
industrial goods directly from the manufacturer, Consumers of industrial be perishable,
fragile, durable, bulky, standardized or non-standardized. goods are very few and hence it
possible for them to deal directly with the Each requires a separate channel of distribution.
The perishable product producer of the goods. There is no need of any intermediaries. It

Complied by Prof. Prashika Meshram

 establishes seeds preferably direct channel to have speedy movement. The durable direct
business contact among manufacturer and consumer. It wipes out the goods peed longer
channel and can reach to any distance. The custom-built existence of any agency as the
dealings in industrial goods required some technical knowledge as the goods of some
definite specifications are required.

2) Manufacturer-Distributor-Consumer

Under this channel of requires to be sold through trained salesforce of the manufacturing
company. distribution of industrial goods reaches their customers through distributors of
industrial goods. The manufacturers who sell their goods through distributors are the
producers of accessories, tools, small parts, multipurpose machines etc. There are large
number of consumers of these products. These products are not sold through any
middlemen.

3) Manufacturer -Agent – Distributor- Consumer

Under this system the manufacturer of industrial goods appoints his representative as sole
agent for distribution of goods. He then sell the goods through industrial distributors to the
consumers. The agent helps in distributing the industrial goods to the consumers spread
over a wide area. This relieves the producer of appointing a sales force for distribution of
the product.

4) Manufacturer-Agent Consumer

Under this system the services of distributor are not used. The agent does his job by selling
the product to the consumer directly.

5) Manufacturer-Manufacturer's sales center-consumer

Under this channel the manufacturer of the industrial goods distribute the goods to the
consumers through the sale depots and centers run by him. Selection of Distribution
Channel

Advertising and Sales Promotion

Characteristic Features of Advertising

The following are the main features of advertising.
1) It is a non-personal form of mass communication addressed to people regarding sale of goods
or services.
2) Advertiser has to pay to the media for publishing his message.
3) It differs from personal selling. Advertisement is addressed to a group of persons while
personal selling is a system of addressing to an individual.
4)Advertising has the object to sell goods and services to the consumers currently and in future.
Advertiser is the known person. Hence it differs from publicity because under publicity the
person may conceal his identity while advertiser cannot.
5) Advertising may be oral as in radio or audio-visual as in cinema, television or slides.

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Objectives of Advertising

1) To increase sales volume

This is the principal purpose of advertising. Advertising uses media of communication to
pursue buyers to but the product telling them as to how the product satisfy their specific
want.
2) To assist personal selling
Advertising is a powerful tool that mail of persuade consumers to purchase goods and
creates a favourable The environment for the salesmen to easily attain their sales target.

3) Promote Sales
Advertising promote sales of the product. The ng to mail order advertisement in the form
of coupons or samples etc. stimulate the consumer to buy the product.

4) Introduction of new product

A market segment where the product was not known to the customer or for introducing a
new product in the market the company takes the help of advertising. The advertising
makes consumers aware of the product and stimulates demand for it.

5) Access to consumers
Sometimes it becomes difficult for the sales personnel to establish personal contacts with
the business executives of the companies who are the consumers or users of the product.
During such a situation advertising plays a crucial role.

6) Development of brand loyalty

Advertising continuously of a product develops inherent liking for the product. This
builds up brand loyalty Consumers purchase and repurchase the same product and ignore
the substitute. They develop a special liking for the product.

7)Support to dealers
The large manufacturing and business concerns undertake extensive advertising campaign
to support their dealers to facilitate smooth distribution of goods. Mass markets are
created by advertising. This helps in bringing down the distribution cost.

7) Project company image

Institutional advertising is the kind of advertising that enables the company to project
a better image in the minds of the people. The purpose of such advertising is not to
promote sale of the product but to build a positive image of the company. This pays in
long run.

Media of Advertising

1) Press Advertising
It is an important and effective media of advertising used since long time and is still
popular. it is a print media. People have great attraction for printed words. Press
advertising can be divided into Newspapers and Magazines.

2) Newspapers
The newspapers are widely read by the people of all sections. They serve as a source
of all types of information including marketing. People believe in newspaper writings

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 hence advertising in it plays an important role in promotion-of the product. There are
many types of newspapers published at national regional and local levels. They are
published in Hindi, English and other regional languages so do advertisements
facilitating the messages to reach the people in their own language. The life of
Newspaper advertisement is short-lived but can be frequently published and
withdrawn at any time. The newspaper is read once by its reader therefore the
advertisement must attract the attention of the reader.

3) Magazines
The magazines are also print media. They are also read widely by a less population
than the newspapers. They are also published in all the languages. Magazines have
longer life as compared to newspapers. There are many types of imagines. They are
literary magazines, magazines for women and children, business and commercial
magazines, film magazines, computer magazines. These magazines have limited
readership, Magazines in regional languages have still less readership. The advertiser
has to find out the readership for the magazine before publishing advertisement in it.
Some magazines are published for a small section of specialized group of people such
as chemical journal, journal of mathematics, physics, engineering etc. A special
feature of magazines is that they are read and reread. They are preserved. It is an
added advantage of this media. Advertisements from magazines cannot be withdrawn
at a short notice.
4) Television Advertising
Like films television is also a very powerful mass media having wide coverage. The
combination of audio and vision facilitates demonstration and explanation of the
product features, qualities, usefulness leaving tremendous impact on the minds of the
viewers. The television advertisement reaches to the maximum people in the country.
It has large viewership. An average person watches television for three to four hours
in a day. The multiplicity of channels made it easier for the advertiser to increase the
frequency of advertisement at prime time. Television is a media of mass
communication which is used to create market for any product through
advertisements. Sponsorship of any programme is possible on television through
which viewers are entertained with advertisements. The advertising on television is a
costly affair. The life of advertisement is very short.

5) Radio Advertising
Radio is also one of the important mass media which reaches the maximum
population of the country. Radio is one of the media through which messages can be
communicated to the people in their own languages. It can convey the messages to the
illiterate people also. A well written message through impressive tone can have
desirable impact impressive tone can have desirable impact, the messages can be
repeated but it possesses low memory value. It has no visual effect. It is costly too,
sometimes listeners get bored with the advertisement.

6) Direct Mail
It is the advertising media used in developed countries of the world. The messages
are conveyed through post directly to the potential consumer. Thus, it is selective in
nature and involves lesser cost as compare to other media. It is very effective and
creates lasting impression. It faces less competition as compared to the other media of
advertisement. It facilitates detailed communication regarding the product quality and

Complied by Prof. Prashika Meshram

 features. It is not a mass communication media. A person may throw the mail without
reading it.

7) Mural Advertising
It is outdoor or external advertisement exists in the form of writing on walls, roadside
hoardings and bill boards. These advertisements catch the attention of every passer
by. The name of the product with its picture and quality features can be displayed

Sales Promotion

Sales promotion is an important promotional activity which assist marketing efforts.

The purpose of sales promotion is to motivate consumers to purchase and helps dealer
to be effective in increasing the sales. The sales promotion activities include holding
exhibition, displays, demonstration, distributing samples freely, also distributing
calendars, gifts, diaries etc. So sales promotion does not include advertising publicity
and personal selling activities. Sales promotion is an additional activity stimulating
sales. It is an additional components of marketing mix. Sales promotion activity also
stimulates dealers to stock more for sales through making certain offers as prizes and
gifts, quantity discounts, extra free product etc. The dealers get attracted through these
offers and put for more orders with the manufacturer.

Objectives of sales promotion

1. For introduction of new product, the hectic sales promotional programmes are
undertaken. The distribution of free samples, door to door canvassing of the
product to pursue consumers are the activities which are followed by the
company.
2. The purpose of launching sales promotion programme may be to overcome the
challenges from the competing firms and their products.
3. To attract new customers, free samples are distributed to increase the sales.
4. The object of sales promotion is also to use the product during off season
selling them a number of other purposes for which the product can be utilized
or by offering off season price cut.
5. The purpose of sales promotion is also to motivate the old and regular buyers
to purchase more of company’s product.
6. The stockists, dealers and wholesalers are forced to purchase more of the
company’s products to meet the increasing demand of the consumers as a
result of continuous sales promotional activities to induce customers to buy
more.

Complied by Prof. Prashika Meshram