How will supply chains be designed to provide value to the customers and how will firms define value?
The Roles of Marketing, Accounting, and Human Resource Departments in Revenue Generation
Revenue management is the process through institutions applies disciplined analytics which will be used to predict the consumer behavior in the macro-economic level and also optimizing the product viability and also to maximize the revenue growth in a company. Majority of companies comprises of many departments such marketing, finance, accounting, human resources, management science and purchasing (Kalyan 2015). The superior of all departments is the accounting which deals with accounting for all the revenues generated by the company. However, other departments also play important roles in the company as discussed below.
Marketing department deals with increasing the number of customers the company deals with as well as maintaining the old customers. The department attains its vision and objects by making sure the customers are aware of new product and services and their needs are attended to by the company. Among other department, marketing is the only department which is not audited by the auditors due to many reasons. In the long run, this department realizes that customer’s satisfaction is an important aspect which should be checked at all the time (Frain and Meegan 2012). If the customer satisfaction is not met there are higher chances of him/her turning to the competitors and as results the revenues generated by the company will reduce. This department acts as a bridge between the consumers and the company as it takes all the customers complains to the company which is checked there in (Pesch 2008). By doing this the chances of the customers foregoing the company to the competitors are reduced to almost zero. The higher the satisfaction to the consumers (who are also the customers), the higher the revenue generated to the company. This explains why this department is also important to the company for the revenue generation. However, one must realize that marketing is the only department which results to revenue generation as other department consumes revenue generated by the marketing department (Frain and Meegan 2012).
Accounting department is the department which deals with making sure all the money generated by the company are used appropriately. This is the department which deals with paying of employees, buying of machinery and also allocating money for all departments. Accounting department is headed by accounting manager who oversees all the transactions carried out in the company. This is department is audited by auditing department which is headed by auditing managers, the reason is to control mismanagement of revenues generated by the company. One must realize that like other department this department also depends on marketing department for revenue increase. However, all departments depend on accounting to be allocated money for daily to daily activities. Qualified personnel are required to manage accounting department (Ravenhill 2013).
Understanding Customer Needs through Revenue Management
To reduce money wastages in a company qualified human resources are required to run different departments. In every company, organization, government and other institutions it is the work of human resource department tom makes sure the appropriate human resource are hired by the company. The qualification of human resources also influences the revenue to the collected in a company. This is because majority of consumers would not buy from a company which they feels their human resources are not qualified. Despite hiring qualified human resources the department makes sure all the employees are trained and educated on how to handle customers to prevent them from turning to competitor firm (McConnell 2013). The key important aspect which makes this department to attract competitive human resource is the ability to provide job security. Every employee would be required to be assured of her or his job security which means it would not be coming to an end soon. Job security attracts competitive employees who despite keeping revenue management at the company high they also act as competitive advantages (Asquer 2018).
Revenue management is a very key aspect in a company. Despite the procedure preventing the mismanagement of revenues the management also plays other important roles as outlined below
In many companies, institutions and government agencies, revenue management provides with better understanding of what they are expected to do by their customers. In the long run, revenue management helps in explaining to the company what the customers expect from the company products in the long run. For instance, the customers may need black Samsung phone; it is the work on the revenue management to inform the company (Adele Berndt 2014). In many cases the company must make sure it fulfils all the consumers need and wants so that they can continue purchasing from the company. Failure to this, the consumers will look for alternative place to buy their products. As their look for alternative place to buy the products or services, the company’s revenue is reduced this is very risk (Adele Berndt 2014).
Pricing is very crucial in a company this is because the company should decide if to put its company products to be very low priced thus less revenue generated or high priced thus increased revenue. When it come to setting the company’s product prices the company must understand that pricing also affect the number of customers the company have by when the products are highly priced few will buy thus less revenue generated and vice versa (Division 2011). In regard to pricing the company must understand its customers, for instance, low income earners they do not care about the quality of the product as they care a lot about the price. This means that in this class they won’t buy the product regardless of its quality so long as the price high. Middles class earners have low sensitive to product’s quality as well as price (Levy, Karst and Winkler 2015). This means that in this class the customers considers both the quality and price of the product. Upper class, those who earners a lot have high disposals income meaning to them quality is the factor they look for in a product. To this class they would buy the product at any price so long as it has the right quality.
Pricing Strategies in Revenue Management
Market segmentation is the process through which the company divided its customers according to their needs so that it can serve them easily. The company must understand the need of its customers for it to serve them appropriately. For example, in many cases the company might divide its customers according to their level of education, level of income or social class. In many society learned people consumer high quality products and to them price is not the issue so long as the product delivers satisfaction (Michel 2013). However, the company must understand that in cases of un-satisfaction from the product they switch to the competing product very easily without warning. Level of income is another important factor which the company must take into consideration. The higher the income to the customers the higher his or her disposal income is. Majority of society tends to divide themselves in-terms of social class where low class are most found in slam areas and upper class are mostly found in residential areas. Those classes consume the products differently in the society (Michel 2013).
Apart from departments some companies are divided into different divisions. Every division is specialized to carry different roles in the company. In many cases, company divides division to deliver certain products or service on their own to the customers. For instance, Samsung Company may come up with communication division (Michel 2013).
Coming up with the right price for commodity can be so challenging to the company. For instance, a company carries out extensive research to determine how other competitors are charging for the same product or services (Wieringa and Verhoef 2011). After this the company compares its listing to them and comes up with a way how to measure up. But what is hard for the company to understand is actually how price those listing actually get booked for (sometimes the company don’t understand how often and in-fact when they get booked). In some cases it is hard to tell even how much interest the company own listing is generating to the company and in some cases if the customers are willing to pay what you are asking for. This is where the idea of smart pricing sets in (Ryzin 2015).
Among other factors product, price, place and promotion affect the revenue generated in a company. When dealing with either of the 4Ps company must take care to avoid losing potential customers. However, among the four, a price is the most sensitive and is used by competitor for competition advantage. Different customers react differently when it comes to the price of a product. For instance, some customers might raise complain to the company while other might just switch to the competitor without rising complain (Wieringa and Verhoef 2011). The research shows that only 80 percent of customers would rise a complain to the company while 20 percent would switch to the competitors without complaining (Wagner 2012). The 80 percent who rises complain 20 percent would never buy again from the company while 30 percentage would continue shopping if their complain are attended to. The rest which is 30 percent would continue buying even if their concerns are not attended to those are loyal customers. Instead of seen them as enemies companies should embrace complaints from customers and act according to them.
The Relevance of Market Segmentation in Revenue Generation
A study which was conducted by RJMetrics on ecommerce buying behavior found that around 32 percent of first time buyer-consumer of a product comes back for another purchase. That might seems like a normal norms but hear this, a customers who comes for second purchase there is high likely-hood they will come for third, fourth, fifth and so on purchases on an incremental scale. Bring a customer Jack once and you’re likely to count them among your most loyal shoppers (Raju and Zhang 2015).
If a company want to attract more and more customers as well as maintain the old customers it must go to an extra miles of carrying promotions and advertisement. Customers would turn to a company where their needs are catered for and they are listened to (Raju and Zhang 2011). Nobody would like to buy in company where his complains are falling in dead eyes. To cater for this, companies have gone to extra miles to provide quality product in order to satisfy they customers. Other ways which company does to maintain their customers include the following as discussed
One of the greatest ways of attracting and retaining existing customers is the use of coupon. In the long run, coupons have proven themselves to highly effective ways of attracting more and more customers in the company. Due to the ability of coupons to “pull in the business” they have gained the required popularity among different marketing managers. One of the simple ways to explain how the coupons are accepted by many companies is through which they are overwhelming being used by consuming public. For instance, advertising age (which is regarded as the bible of the advertising industry) reports that about the 87 percent of all customers in a company use coupons. Also, another marketing research firm in the name of A.C. Nelson CO. concluded that 95% of all the customers like coupons while 60% actively look for the coupons in the market. The increased use of coupon attracts more and more customers to the company thus the profit to the company keeps on increasing and also the revenue generated in the long run (Dhar 2015).
Rewarding customers is another important aspect in a company. This is a new way of creating promotions in a company. There is higher chances of a customers coming back to buy for more once he or she is rewarded for buying once. Some of the companies which use rewarding system to attract more customers are telecommunication system. For instance, Samsung companies print t-shirts with their promotions and products for sale and reward their customers once they buy the product from the company (James A. Pooler 2013). The printed t-shirt which is given to the customers would not only apply to the customer who bought the product once he wears the t-shirt he or she will spread the word to other consumers in the market.
The Critical Role of Advertisement in Revenue Generation
Another important ways of attracting customers is offering discount to the commodities. Some commodity prefers offering discount during certain period. For example, Nike Company offers discount on its foot wear during the Christmas season. Offering discounts acts as a promotion to the company where it sells more of the targeted products during that time. Offering discounts sometimes attract customers to buy even unplanned products from the company (Pratt 2013). Sometime offering of discount can be used at a different way, for example, a company can design it in a way that once a customer buys two or three products he or she gets one more product. This attracts more and more customers to the company results to increased profit and the revenue in the long run (Laro and Pratt 2015).
In conclusion, strategic supply and logistics management can use revenue management and smart pricing for the benefit of the company. Both revenue management and smart pricing aims at increasing the profit made by the company. The primary reasons for any business is profit making to the owners which cannot be realized without putting the customers need mind in the long. The higher the customers are satisfied the higher the profit made. However, sometimes it can be very challenging to understand the customers’ need which can be attained only through promotions and advertisement. Some research which was carried around 2014 revealed that majority of customer actually does not know what they want unless they are informed. In the same research, the researcher also noted that customer would like to be constant remembered about the existing of a product and services otherwise they will forget. As discussed earlier, revenue management and pricing is a key important to both the company and the customers. Satisfaction of customers is an important aspect for every company growth, in order to attain customer satisfaction extensive research is required by the company otherwise the company will not attain it. The profit made by the company must be allocated to all departments equally and according to level of contribution. Mismanagement of funds can result to company collapsing and failure; this is why the management of revenue is one of the most important factors in every company.
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