Target Markets and Segmentation
Target Markets and Segmentation
Friday, May 15, 2009
[Wikipedia]
Marketing is an integrated communications-based process through which individuals and communities discover that existing and newly-identified needs and wants may be satisfied by the products and services of others.
Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. [1] The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services.
Marketing practice tends to be seen as a creative industry, which includes advertising, distribution andselling.
Marketing is influenced by many of the social sciences, particularly psychology, sociology, andeconomics. Anthropology and neuroscience are also small but growing influences. "
Wednesday, May 13, 2009
Approaches:
The net operating income approach assumes that creditors do not increase their required rate of return as a company takes on debt, but investors do. Further, the rate at which investors increase their required rate of return as the financing mix is shifted toward debt exactly offsets the weighting away from the more expensive equity and toward the cheaper debt. The result is that the cost of capital remains constant regardless of the financing mix. This approach concludes that there is no optimal financing mix¾any mix is as good as any other.
Assumptions:
1. Cost of debt remain constant with change in d/e ratio.
2. cost of equtiy increases with increase of Debt capital structure.
3. Overall cost of capital remain constant.
Implications:
=====>i. for Zero debt company Ke= Ko
=====>ii. In a given risk category, firms with different capital structure will have same cost of debt and
cost of captial
Traditional Approach
The traditional approach assumes that both creditors and investors increase their required rates of return as a company takes on debt. At first this increase is small, and the weighting toward lower-cost debt pushes the cost of capital down. Eventually, the rate at which creditors and investors increase their required rates of return accelerates and dominates the weighting toward debt, pushing the cost of capital back upward. The result is that the cost of capital declines with debt and reaches a minimum point before rising again. This approach concludes that there is a optimal financing mix consisting of some debt and some equity.
Assumptions:
1. When a capital structure is changed cost of debt and cost of equity change. At loc D/E ratio cost of debt and equity are relatively low.
Monday, May 11, 2009
The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project.
NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.
The NPV analysis then gives a precise formula for deciding whether or not to proceed with the investment project. Applying NPV analysis requires judgements about revenues,expenses, depreciation tax shields, true economic lives of plant and equipment, and the appropriate discount rate. Precision of method is not the same as precision of result.The validity of the assumptions is also critically important.garbage-in, garbage-out
Sunday, May 10, 2009
Friday, May 8, 2009
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