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1. Men
2. Materials
3. Machines
4. Market and
5. Money
The well known age “Money is what money does” illustrate this pivotal
role of money.
Accounting records state only those facts about a business firm, which
can be expressed in monetary terms. In other words, business events
and facts that cannot be expressed in monetary terms, howsoever
important they may be, are excluded.
For example, the death of the managing director who was guiding the
destiny of the company since its inception, the emergence of a better
product at a lower price in the market, the emergence of a new
technology and so on (though very significant from the future
perspective of business) are ignored.
Accrual Concept
ACOUNTING CONVENTIONS:
1. Conservatism
2. Consistency
3. Disclosure
4. Objectivity
5. Materiality
CAPITAL EXPENDITURE, REVENUE EXPENDITURE AND
DEFERRED REVENUE EXPENDITURE :
The term cost has a broad meaning here and covers in its ambit, all
costs of setting up as well as running a marketing organization.
Some of these costs are one time in nature –the capital cost in
accounting terminology. Other costs are revenue or recurring costs.
But even those one –time capital costs become a part and parcel of the
recurring costs through the process of depreciation and amortization,
so that in the end, all costs get absorbed or recovered through
operations.
Marketing ROI:
Almost 75% said they are aligned, but need some degree of
improvement. (The need is “significant” for 28%). And 23% flat-out
said that the goals are not aligned at all.
Here’s one possible reason why: Half of the marketers said they are
frequently pressured to produce short-term results at the expense of
long-term growth. And 28% claimed they are sometimes asked to do
this.
And which metrics are used to monitor growth? The chief one is sales
at 83%. This is followed by revenue at 80% and profits at 78%.
As for media, 23% of the marketers said direct mail had most impact
on their growth goals. This was followed by print (15%); e-mail (10%);
and point-of-purchase (10%).
Sales: 83%
Revenue: 80%,
Profits: 78%
Other: 3%
Revenue: 28%
Profits: 18%
Sales: 15%
Customer satisfaction: 8%
New customers: 5%
Brand awareness: 3%
Intent to recommend: 3%
Other: 13%
How did you select the marketing channels used this year?
Other
Don't know/refused: 8%
Online marketing: 4%
ROI measurement: 4%
Creative communication: 2%
Long-term planning: 2%
5 May 2009
Key points
• Finance and marketing have a disjointed relationship.
• Finance focuses too much on budget and not enough on
performance, whereas marketing
concentrates on brand awareness/image but not on sales or
profit.
• The best organisations strike a balance between financial rigour
& marketing imagination.
• Progress can be made by holding marketing/finance workshops
and ensuring both sides
• ask the right questions.
This essence of this candid research has led to the creation of the
‘infinity model’, an innovative framework designed to put the finance-
marketing dialogue back on the rails. The report is prescriptive about
what constitutes good and bad evidence about marketing efficiency
and effectiveness, and enables managers to decide for themselves
what is feasible. The model can be tailored to the needs of all types
and sizes of organisation.
This creative tension is found in all their working practices, and these
are things that any other organisation can and should copy. Managers
can assess their adherence to this model by answering the questions
listed in the report’s checklists.
By adopting this double cycle, the failure rate of marketing ideas and
associated waste can be reduced significantly. It can never be totally
eliminated because customers are forever changeable and are never
completely predictable. Good senior management accepts uncertainty
and risk as an innate part of marketing. They do not try to force a
‘right every time’ philosophy; instead they manage uncertainty using
the best methods available.
Quick wins from these workshops can be put into practice with
immediate benefits. A longer term programme of change may be
identified too, and the report contains a road map to plan out this more
strategic approach.
The 10 benefits
An important new report “Return on Ideas” has just been published. Its
subject? How any organisation that has to market itself can be more
efficient, effective and value adding. This is a frustrating business
challenge and what we’ve delivered isn’t theoretical or waffle. The
report is packed with practical suggestions, checklists and case
studies, solidly based on candid research on over 100 organisations,
large and small and across industries. When we shared it in draft with
a sample of CIMA members they gave it their unanimous thumbs up.
The need for this guidance paper came from joint discussions between
the Chartered Institute of Management Accountants (CIMA), the
Chartered Institute of Marketing (CIM) and the Direct Marketing
Association (DMA). It emerged that members of all three professional
bodies were concerned about the value contributed by marketing and
what constitutes sound evidence about its value. Pivotal to this, they also recognised the
need to drive productive teamwork between finance and marketing working together.
Why do finance and marketing often have meaningless
discussions?
The essence of this candid research has led to the creation of the
“infinity model” – an innovative framework designed to put the
finance-marketing dialogue back on the rails. Full of practical self-help
exercises, questions, checklists and illustrative case study examples,
the report is prescriptive about what constitutes good and bad
evidence about marketing efficiency and effectiveness, and it enables
managers to decide for themselves what is feasible. The model can be
tailored to the needs of all types and sizes of organisation.
This creative tension is found in all their working practices, and these
are things that any other organisation can and should copy. Managers
can assess their adherence to this model by answering the questions
listed in the report’s checklists.
By adopting this double cycle, the failure rate of marketing ideas and
associated waste can be reduced significantly. It can never be totally
eliminated because customers are forever changeable and are never
completely predictable. Good senior management accept uncertainty
and risk as an innate part of marketing. They do not try to force a
‘right every time’ philosophy; instead they manage uncertainty using
the best methods available.
Quick wins from these workshops can be put into practice with
immediate benefits. A longer term programme of change may be
identified too, and the report contains a road map to plan out this more
strategic approach.
Conclusions