STUDENTS' CORNER - 239

We will look into the first R; the Right Product. Choosing the Right product involves extensive investigation into the market dynamics; otherwise, there is a possibility of choosing a wrong product. This wrong exercise will cost the company and the  extent of the cost depends on the time taken to realize the wrong choice; the quantity of products produced and all other marketing expenses --- these cost the company which will have to recover the money lost through diligent marketing of a Right product.

Before we proceed further, let us make it clear to ourselves that market dynamics are never static; particularly with unprecedented development in technology and digitalization. Every day new products or new features to the old products; and, exciting advertisements to attract the attention of the customers who are exposed too much to the world of marketing magic. That is what is suggested when experts emphasize insights into marketing.  Insights are beyond academic statistics which are often the facts of the past; recent or remote, does not matter. Past is past. That is what is implied when while teaching planning to the executives it is said often ‘Plan for the best; but be prepared for the worst’. Simply, it means, future cannot be predicted with certainty.  Of course, all this is not to discourage but to determine that whatever step we take, we take with utmost caution, information and readiness to face challenges.

An exact idea of total logistics cost is necessary while pricing the product and engaging in other administrative activities like budgeting. Budgeting is a comprehensive act taking into account all the expenses required to run the show effectively and no less efficiently. Collection of all facts and the interpretation of the facts impersonally and professionally precede budgeting; it is common experience that the expenses do not occur the way there were planned while budgeting. Of course the deviation from the budget must be minimal, either way; more or less.

The whole business is focused on the excess money your company produces as the bottom line of the business engagement. Without the excess money which is popularly called profit, no business can sustain itself. It is a million dollar question: what is the sure way to achieve profit out of the business. Of course, volumes after volumes are written; and yet, the answer is elusive. All the same, anyone engaging in an enterprise cannot help engaging himself in chalking out a path for his business to make that golden excess money. Whether it be Adani or Bill Gate, no one can escape from the excess money obsession. To arrive at the exact quantity of the excess, you must first know the total expenditure incurred. Calculation begins there and ends there. Here comes the logistics cost without which it is impossible to arrive at the total expenditure incurred by your business; of course, there is one word for it. Investment.

We will see in our next how to arrive at the total cost of the business.