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MGT601 - SME Management - Lecture Handout 34

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ROLE OF MARKETING IN SME – III

Product Mix

It refers to number of products offered by a company. It is not uncommon to find small firms selling ultiple products. Product mix is done to optimize profits.

Advantages of product mix

  1. It enables the firm to serve different segments of the market.
  2. It gives steady sales & profits to the firm.
  3. The firm can keep all its bases covered.

Demerits of Product Mix

  1. It makes greater demand on firm’s resources in the form of increased investment in production facilities and inventory.
  2. Marketing Problems.

The firm should weigh the pros and cons of a wider versus narrow product mix. The ultimate decision would rest on such considerations as the available resources, existing and future market opportunities and strategies of competitors. Phillips kotler has suggested the following indicators of firm’s sub optional product mix;

  1. Disproportionately high percentage of total profits from a few products;
  2. Insufficient product breadth to exploit sales force;
  3. Excessive productive capacity on a chronic or seasonal basis;
  4. Steadily declining sales or profits.

  5. Read more: MGT601 - SME Management - Lecture Handout 34

MGT601 - SME Management - Lecture Handout 18

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PROBLEMS FACED BY NEWLY ESTABLISHED COMPANY

This lecture will continue with the previous lecture problem and then chapter deals with the teething problem that a newly established company faces.

Cash Flow Analysis

If the projected sales associated financial requirements and available financial resources are known, the anticipated cash flow can easily be determined.

Cash Flow (Projected)

Cash Flow and Financial Transactions Period 1 Period 2
1) Cash flow    
Initial expense    
Fixed investment    
Operating expense    
Total cash outflow    
2) Cash inflow    
Cash sales    
Account receivables    
Total operating inflow    
3) Net cash flow (2-1)    
4) Desired minimum cash balance    
5) Total amount of funds required
[3 (if negative + 4)]
   

Read more: MGT601 - SME Management - Lecture Handout 18