How To Managing Profits?

Pricing is an important part of your business. Pricing generally deals with price determination in various market forms, pricing method, differential pricing, product-line pricing and forecasting. It is the genesis of a firm’s revenue and its success largely depends on how correctly the pricing decisions are taken. A business is organised for the purpose of making profits and in the long run profits decide the success of a business. Analysing profits would have been an easy task if we had perfect knowledge about the future. However, while nothing in the world is certain, expectations are not always realised. Hence, profit planning and management becomes an important part of business especially for the business owner.

Among other matters that need the owner’s attention, the considerably complex ones relate to capital investment. It requires constant planning and attention to manage the capital in a way that would lead to maximum profit. Often the decision involving capital management are taken by the top management, or the owner, in case of small businesses. Rate of return, selection of projects, income and sales tax, controlling expenditure etc. form the main parts of capital management.

Following are a few important business decisions that you will be required to take, while managing capital:

• What products and services to invest in;
• What production technique should be used;
• How much to produce and how to price it;
• What should be the ideal size and location for a new plant;
• When is the ideal time to replace the equipment;
• How to allocate the available capital, etc.

A good understanding of the economic factors affecting your business makes you more competitive in handling day-to-day matters. If the operations are conducted through known focus functional areas in your company, such as finance, marketing, personnel and production etc., knowledge of capital investment serves as an integrating agent by coordinating the activities in these areas to a better outcome.

Integrated Marketing Communication is another effective way to achieve the best results for the company, in terms of investment in marketing activities. The idea is to coordinate the firm’s promotional efforts to achieve the best combined effects for the firm. As discussed in my post Awesome Under $5000 Business Ideas, small towns in the US have an emerging economy and are the biggest potential market for consumer goods and as well as eCommerce. The proof of their growth story is corroborated by most FMCG companies that are now earning a nearly similar proportion of revenues from both big and small markets. In the present scenario, small counties are emerging as hubs of entrepreneurial activity, beating larger cities and even metropolises in their growth rate. Promotion involves a number of tools we can use to increase demand for our products. The most well-known component of promotion is advertising, but advertising is not a stand-alone process. It is a part of integrated marketing communication process.

All of us know that firms pay a lot of money to have their goods displayed prominently in the stores, especially for free-standing displays at more desirable display areas like the end of an aisle, near the check-out counter etc. Occasionally, a representative may also be placed to display the product. It is noteworthy that at HyperEffects, marketing is an art and a science in itself. We use state of the art graphics and videos as an “Art” and tested techniques and strategies as “The Science” of marketing, to target potential clients. You may contact us for a free consultation with one of our business experts on effective and economical ways to advertise your product.

In my next post, I am going to discuss the theory of consumer behaviour. It seeks to explain the importance of consumer satisfaction from your products and services. Once a consumer is happy and convinced, he does not deviate or look for another company for the same service. In order to achieve this, it is important to understand the concept of ‘utility’, which refers to the consumability of your product or mental or physical satisfaction that your service brings to the customer. I will also highlight the important pointers in utility, such as its subjectiveness, relativity, etc.

Please share your experiences in the comments section and I will add them to my future posts.