Basic Macro and Microeconomic Policies - Assignment Example

Topic: Accounting INTRODUCTION Accounting problems and financial data are used in decision making. Financial ment are used by managers to determine if advertising costs in both the off line (television, radio and print) as well as the dot.com (internet) arena are kept to reasonable minimum. The following paragraphs describe the relationship of advertising to accounting problems and financial which was overlooked or neglected during the dot -com bust. BODY Accounting problems and financial data were overlooked or neglected during the dot-com bust. First, too much money was spent on advertising which focused on selling and not marketing. Second, too much advertising money could have been saved if ads were focused on market segments. Cost extravagances in the airline industry had brought financial costs up decreasing profits but did not automatically mean increase in sales. First, too much money was spent on advertising which focused on selling and not marketing in both online and offline advertising(Churchill,1995). The prior selling attitude of companies as the strove to increase net profits had been to prioritize the seller's aim to generate profits. The sad thing about this is that the customers' needs and wants were put to second place or just simply not taken up. Thus, money was spent paying computer programmers large sums of money to make websites that would catch the eyes of prospective computer users. To prove that this type of strategy to increase sales was effective, the companies targeted all computers users whether they were inside the United States or in the United Kingdom or elsewhere. Unfortunately, there is no logic that increased advertising in the internet will automatically translate to increased sales. For, man is a slow learner. This simply means that the traditional way of advertising through the usual media is more effective when compared to spending huge amounts of money on internet advertising(Etzel,2001). For one, people using the internet have installed anti -spamming and anti -advertising software. These software block unwanted spasm and advertising pop -ups. The current trend of marketing focused more on filling the needs of the customers. Thus, marketing has replaced massive costly unrewarding advertisements in many cases. Marketing is concentrated on determining what the customers' needs are. This is what the dot com companies should have done in the first place in order to avoid the bust which punished them through low sales increases. Also, Marketing should replace selling as the corporate spending medium. This will increase sales while decreasing advertising expenses. A good marketing effort would be to make quality products at lesser cost. Also, providing after prior to, day of sale and after sales quality services by front line employees that have a heart to hear the customers' complaints, needs and suggestions. Thus, advertising money should be maximized by using media where more people can see the advertisements. These traditional media include the television, radio and the newspapers. Meaning it should be spent to market products with the corresponding accounting liability of increasing sales. Surely, too much money should not be wasted on advertising which focused on selling and not marketing(Jeffrey, 2004). Second, too much advertising money could have been saved if ads were focused on market segments. The dot com companies spent unnecessary advertising money that tried to reach a wide area. For, the advertisements reach people from many countries around the world who were not interested to buy a product coming from the other side of the world. Economically, people find products locally made to be cheaper than products that are imported. Macro economics tells us that the currency exchange rate causes time delay from buying/selling to the receiving of money. This is true especially in third world countries where the people's per capital income could barely feed their hand to mouth existence(Pindyck,2001). Meaning, ads cost could be lessened if they were spent focusing on a specific market segment. For clarity, segments could divided into, the youth, the parents, the rich, the middle class, the minimum wage earners, the diabetics (for diabetic drugs), the neighborhood, etc. after identifying market segments, the company should have defined and promoted their products in order to prioritize filling the needs of the customers and relegating to secondary the selling company's needs to increase sales. For, the companies must quickly and in a timely manner find unique and products of better quality products coupled with better before, during and after sales services as markets become more competitive with the entrance of more new companies with highly innovative products and marketing schemes. Surely, a happily pampered customer will increase the sales because he or she will continue returning to the company to buy its products. Another means of increasing sales is satisfying the needs of its current clients. A satisfied client will advertise to his or her friends, relatives and daily contacts of how he or she enjoyed the benefits of using the company's products and services. Increased sales that surpass company benchmarks and goals will result to lower advertising costs. Evidently, too much advertising money could have been saved if ads were focused on market segments(Brown,1997) . Some basic macro and microeconomic policies would have had a positive impact on strategic business decisions. These economic policies include the maximum use of the four P's of marketing. First, the company should have an effective promotional (marketing) strategy(Colander,1998). This marketing strategy includes making feasibility studies on what the needs of the customers are. Then, the company will manufacture or offer the quality products and prior to, during and after sales services that will fill the customers' needs(Baumol, 1998). The company should also offer services and products at reasonable prices. Reasonable means that it should not be unreasonably higher than the competitors' prices because the customers will tend to look for quality products at lower or reasonable prices. This is what we call as supply and demand economic theory. The products must be sold at a place that is conducive to the customers' easy purchase. However, these four P's must be complemented with other economic policies. These policies include the company's relevantly getting to know their customers. The company could give happy birthday cards and Christmas card to their current clients as well as prospective clients. And, the company must respond to each complaint, request and suggestion of current customers and prospective customers to the point of pampering them. In addition, the company should build a long lasting relationship that will be fruitful to both the current customers and prospective customers and the company itself. As a result, the company must increase its market share by satisfying the customers' every whims and caprices. Microeconomically, when prices of products offered are lower than the competitors, the demand for such products will increase(Slavin, 1989). This increases sales. This sales increase coupled with the decrease in advertising costs through advertising to marketing to smaller MARKET segments will increase profits(MacStravic, 2000) CONCLUSION Summarily, accounting problems and financial data were overlooked or neglected during the dot-com bust. Meaning, advertising money should have been reasonably budgeted not to exceed a profitable level. Also, some basic macro and microeconomic policies would have had a positive impact on strategic business decisions. Meaning, lesser expenses can translate to lesser selling prices. For, if selling prices go down, demand for the products will surely rise. This will result to increased sales followed by the corresponding increase in net profits. To end, accounting problems and financial data as well as micro and macro economic policies should never be overlooked or neglected to prevent another dot -com bust. 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