Theory of Mercantilism Free Essays

string(237) " lies in the increasing professionalisation and technification of the wars of the era, which turned the maintenance of adequate reserve funds \(in the prospect of war\) into a more and more expensive and eventually competitive business\." Theory of Mercantilism Most of the European economists who wrote between 1500 and 1750 are today generally considered mercantilists; this term was initially used solely by critics, such as Mirabeau and Smith, but was quickly adopted by historians. Originally the standard English term was â€Å"mercantile system†. The word â€Å"mercantilism† was introduced into English from German in the early 19th century. We will write a custom essay sample on Theory of Mercantilism or any similar topic only for you Order Now The bulk of what is commonly called â€Å"mercantilist literature† appeared in the 1620s in Great Britain. 6] Smith saw English merchant Thomas Mun (1571–1641) as a major creator of the mercantile system, especially in his posthumously published Treasure by Foreign Trade (1664), which Smith considered the archetype or manifesto of the movement. [7] Perhaps the last major mercantilist work was James Steuart’s Principles of Political Economy published in 1767. [8] â€Å"Mercantilist literature† also extended beyond England. For example, Italy, France, and Spain produced noted writers of mercantilist themes including Italy’s Giovanni Botero (1544–1617) and Antonio Serra (1580-? ; France’s, Jean Bodin, Colbert and other physiocrats. Themes also existed in writers from the German historical school from List, as well as followers of the â€Å"American system† and British â€Å"free-trade imperialism,† thus stretching the syste m into the 19th century. However, many British writers, including Mun and Misselden, were merchants, while many of the writers from other countries were public officials. Beyond mercantilism as a way of understanding the wealth and power of nations, Mun and Misselden are noted for their viewpoints on a wide range of economic matters. [9] Merchants in Venice The Austrian lawyer and scholar Philipp Wilhelm von Hornick, in his Austria Over All, If She Only Will of 1684, detailed a nine-point program of what he deemed effective national economy, which sums up the tenets of mercantilism comprehensively:[10] That every inch of a country’s soil be utilized for agriculture, mining or manufacturing. That all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials. That a large, working population be encouraged. That all export of gold and silver be prohibited and all domestic money be kept in circulation. That all imports of foreign goods be discouraged as much as possible. That where certain imports are indispensable they be obtained at first hand, in exchange for other domestic goods instead of gold and silver. That as much as possible, imports be confined to raw materials that can be finished [in the home country]. That opportunities be constantly sought for selling a country’s surplus manufactures to foreigners, so far as necessary, for gold and silver. That no importation be allowed if such goods are sufficiently and suitably supplied at home. Other than Von Hornick, there were no mercantilist writers presenting an overarching scheme for the ideal economy, as Adam Smith would later do for classical economics. Rather, each mercantilist writer tended to focus on a single area of the economy. [11] Only later did non-mercantilist scholars integrate these â€Å"diverse† ideas into what they called mercantilism. Some scholars thus reject the idea of mercantilism completely, arguing that it gives â€Å"a false unity to disparate events†. Smith saw the mercantile system as an enormous conspiracy by manufacturers and merchants against consumers, a view that has led some authors, especially Robert E. Ekelund and Robert D. Tollison to call mercantilism â€Å"a rent-seeking society†. To a certain extent, mercantilist doctrine itself made a general theory of economics impossible. Mercantilists viewed the economic system as a zero-sum game, in which any gain by one party required a loss by another. [12] Thus, any system of policies that benefited one group would by definition harm the other, and there was no possibility of economics being used to maximize the â€Å"commonwealth†, or common good. [13] Mercantilists’ writings were also generally created to rationalize particular practices rather than as investigations into the best policies. 14] Mercantilist domestic policy was more fragmented than its trade policy. While Adam Smith portrayed mercantilism as supportive of strict controls over the economy, many mercantilists disagreed. The early modern era was one of letters patent and government-imposed monopolies; some mercantilists supported these, but others ack nowledged the corruption and inefficiency of such systems. Many mercantilists also realized that the inevitable results of quotas and price ceilings were black markets. One notion mercantilists widely agreed upon was the need for economic oppression of the working population; laborers and farmers were to live at the â€Å"margins of subsistence†. The goal was to maximize production, with no concern for consumption. Extra money, free time, or education for the â€Å"lower classes† was seen to inevitably lead to vice and laziness, and would result in harm to the economy. [15] Infinite growth The mercantilists saw a large population as a form of wealth which made possible the development of bigger markets and armies. The opposing doctrine of physiocracy predicted that mankind would outgrow its resources. Origins Scholars debate over why mercantilism dominated economic ideology for 250 years. [16] One group, represented by Jacob Viner, argues that mercantilism was simply a straightforward, common-sense system whose logical fallacies could not be discovered by the people of the time, as they simply lacked the required analytical tools. The second school, supported by scholars such as Robert B. Ekelund, contends that mercantilism was not a mistake, but rather the best possible system for those who developed it. This school argues that mercantilist policies were developed and enforced by rent-seeking merchants and governments. Merchants benefited greatly from the enforced monopolies, bans on foreign competition, and poverty of the workers. Governments benefited from the high tariffs and payments from the merchants. Whereas later economic ideas were often developed by academics and philosophers, almost all mercantilist writers were merchants or government officials. [17] Monetarism offers a third explanation for mercantilism. European trade exported bullion to pay for goods from Asia, thus reducing the money supply and putting downward pressure on prices and economic activity. The evidence for this hypothesis is the lack of inflation in the English economy until the Revolutionary and Napoleonic wars when paper money was extensively used. A fourth explanation lies in the increasing professionalisation and technification of the wars of the era, which turned the maintenance of adequate reserve funds (in the prospect of war) into a more and more expensive and eventually competitive business. You read "Theory of Mercantilism" in category "Essay examples" Mercantilism developed at a time when the European economy was in transition. Isolated feudal estates were being replaced by centralized nation-states as the focus of power. Technological changes in shipping and the growth of urban centres led to a rapid increase in international trade. [18] Mercantilism focused on how this trade could best aid the states. Another important change was the introduction of double-entry bookkeeping and modern accounting. This accounting made extremely clear the inflow and outflow of trade, contributing to the close scrutiny given to the balance of trade. [19] Of course, the impact of the discovery of America cannot be ignored. New markets and new mines propelled foreign trade to previously inconceivable heights. The latter led to â€Å"the great upward movement in prices† and an increase in â€Å"the volume of merchant activity itself. †[20] Prior to mercantilism, the most important economic work done in Europe was by the medieval scholastic theorists. The goal of these thinkers was to find an economic system that was compatible with Christian doctrines of piety and justice. They focused mainly on microeconomics and local exchanges between individuals. Mercantilism was closely aligned with the other theories and ideas that were replacing the medieval worldview. This period saw the adoption of the very Machiavellian realpolitik and the primacy of the raison d’etat in international relations. The mercantilist idea that all trade was a zero sum game, in which each side was trying to best the other in a ruthless competition, was integrated into the works of Thomas Hobbes. The dark view of human nature also fit well with the Puritan view of the world, and some of the most stridently mercantilist legislation, such as the Navigation Acts, were enacted by the government of Oliver Cromwell. [21] Policies French finance minister and mercantilist Jean-Baptiste Colbert served for over 20 years. Mercantilist ideas were the dominant economic ideology of all of Europe in the early modern period, and most states embraced it to a certain degree. Mercantilism was centred in England and France, and it was in these states that mercantilist polices were most often enacted. France Mercantilism arose in France in the early 16th century, soon after the monarchy had become the dominant force in French politics. In 1539, an important decree banned the importation of woolen goods from Spain and some parts of Flanders. The next year, a number of restrictions were imposed on the export of bullion. [22] Over the rest of the sixteenth century further protectionist measures were introduced. The height of French mercantilism is closely associated with Jean-Baptiste Colbert, finance minister for 22 years in the 17th century, to the extent that French mercantilism is sometimes called Colbertism. Under Colbert, the French government became deeply involved in the economy in order to increase exports. Protectionist policies were enacted that limited imports and favored exports. Industries were organized into guilds and monopolies, and production was regulated by the state through a series of over a thousand directives outlining how different products should be produced. [23] To encourage industry, foreign artisans and craftsmen were imported. Colbert also worked to decrease internal barriers to trade, reducing internal tariffs and building an extensive network of roads and canals. Colbert’s policies were quite successful, and France’s industrial output and economy grew considerably during this period, as France became the dominant European power. He was less successful in turning France into a major trading power, and Britain and the Netherlands remained supreme in this field. [23] Great Britain In England, mercantilism reached its peak during the 1340-1789 Long Parliament government (1640–1660). Mercantilist policies were also embraced throughout much of the Tudor and Stuart periods, with Robert Walpole being another major proponent. In Britain, government control over the domestic economy was far less extensive than on the Continent, limited by common law and the steadily increasing power of Parliament. 24] Government-controlled monopolies were common, especially before the English Civil War, but were often controversial. [25] The Anglo-Dutch Wars were fought between the English and the Dutch for control over the seas and trade routes. With respect to its colonies, British mercantilism meant that the government and the merchants became partners with the goal of increasing political power and private wealth, to the ex clusion of other empires. The government protected its merchants—and kept others out—by trade barriers, regulations, and subsidies to domestic industries in order to maximize exports from and minimize imports to the realm. The government had to fight smuggling—which became a favorite American technique in the 18th century to circumvent the restrictions on trading with the French, Spanish or Dutch. The goal of mercantilism was to run trade surpluses, so that gold and silver would pour into London. The government took its share through duties and taxes, with the remainder going to merchants in Britain. The government spent much of its revenue on a superb Royal Navy, which not only protected the British colonies but threatened the colonies of the other empires, and sometimes seized them. Thus the British Navy captured New Amsterdam (New York) in 1664. The colonies were captive markets for British industry, and the goal was to enrich the mother country. [26] British mercantilist writers were themselves divided on whether domestic controls were necessary. British mercantilism thus mainly took the form of efforts to control trade. A wide array of regulations was put in place to encourage exports and discourage imports. Tariffs were placed on imports and bounties given for exports, and the export of some raw materials was banned completely. The Navigation Acts expelled foreign merchants from England’s domestic trade. The nation aggressively sought colonies and once under British control, regulations were imposed that allowed the colony to only produce raw materials and to only trade with Britain. This led to friction with the inhabitants of these colonies, and mercantilist policies (such as forbidding trade with other empires and controls over smuggling) were a major irritant leading to the American Revolution. Over all, however, mercantilist policies had a positive impact on Britain helping turn it into the world’s dominant trader, and an international superpower[citation needed]. One domestic policy that had a lasting impact was the conversion of â€Å"waste lands† to agricultural use. Mercantilists felt that to maximize a nation’s power all land and resources had to be used to their utmost, and this era thus saw projects like the draining of The Fens. [27] Mercantilism helped create trade patterns such as the triangular trade in the North Atlantic, in which raw materials were imported to the metropolis and then processed and redistributed to other colonies. Other countries The other nations of Europe also embraced mercantilism to varying degrees. The Netherlands, which had become the financial centre of Europe by being its most efficient trader, had little interest in seeing trade restricted and adopted few mercantilist policies. Mercantilism became prominent in Central Europe and Scandinavia after the Thirty Years’ War (1618–1648), with Christina of Sweden, Jacob Kettler of Courland, Christian IV of Denmark being notable proponents. The Habsburg Holy Roman Emperors had long been interested in mercantilist policies, but the vast and decentralized nature of their empire made implementing such notions difficult. Some constituent states of the empire did embrace Mercantilism, most notably Prussia, which under Frederick the Great had perhaps the most rigidly controlled economy in Europe. During the economic collapse of the seventeenth century Spain had little coherent economic policy, but French mercantilist policies were imported by Philip V with some success. Russia under Peter I (Peter the Great) attempted to pursue mercantilism, but had little success because of Russia’s lack of a large merchant class or an industrial base. Wars and imperialism Mercantilism was economic warfare and was well suited to an era of military warfare. [28] Since the level of world trade was viewed as fixed, it followed that the only way to increase a nation’s trade was to take it from another. A number of wars, most notably the Anglo-Dutch Wars and the Franco-Dutch Wars, can be linked directly to mercantilist theories. Most wars had other causes but they reinforced mercantilism by clearly defining the enemy, and justified damage to the enemy’s economy. Mercantilism fueled the imperialism of this era, as many nations expended significant effort to build new colonies that would be sources of gold (as in Mexico) or sugar (as in the West Indies), as well as becoming exclusive markets. European power spread around the globe, often under the aegis of companies with government-guaranteed monopolies in certain defined geographical regions, such as the Dutch East India Company or the British Hudson’s Bay Company (operating in present-day Canada). How to cite Theory of Mercantilism, Essay examples

Impressive And Edible Table Decorations Essay Example For Students

Impressive And Edible Table Decorations Essay Demonst. Outline Impressive Edible Table DecorationsGeneral Purpose: To teach a unique and creative craft to the audience. Specific Purpose: To show the audience an inventive way to decorate forparties, holidays, and even weddings. Central Idea: Holidays, parties, and even formal events have manyopportunities to display a simple, easy, and impressive decoration. Introduction To Speech:I. Have you ever watched a chef or culinary artist create somethingamazing out of a simple food and wished you could do the samething? Have you ever wondered why it looked so easy? II. Youve probably heard the expression You eat with your eyes beforeyou eat with your mouth. Whether you are entertaining your guestsby cooking an Asian or Western cuisine, nothing enhances acarefully prepared dish like a graceful fruit or vegetable carving. Transition: Decorations can make or break any affair, but can be extra-special if done with creativity and originality. BodyI. An eye-catching garnish will add to any dish being served. a. The food can be canned soup ; beans, but if the presentationlooks great, the food will appear to be of the same caliber. II. There are only a few general techniques to remember for thecreation of basic food art. a. The knife should always be longer than the fruit or vegetablebeing cut throughb. Cutting wedges is a technique used for many different creationsand should therefore be performed accurately. III. Explanation of 3 decorations. a. Apple Swanb. Orange Fishc. Radish MouseTransition: All of these are simple techniques to spice up a dcor. Conclusion: Next time you attend a banquet, or host a party of your own,remember these ideas and apply them. Perhaps you can create a few newideas yourself in the process. Visual Aids: Pre-made carvings of each animal, along with the partialdemonstration of the one main creation. Audience Analysis: I know the audience has probably never thought of foodart, nor have they been exposed to an opportunity to learn the craft. Ihad a hard time trying to consider the people who have not interest in thesubject at all, but I think those people will be satisfied during the hands-on creation of the food animals.

Bail Bonds Essays - Criminal Law, Legal Professions, Bail

Bail Bonds Criminal Law term paper 17OCT00 Bail Bonds The principle of bail is basic to our system of justice and its practice as old as English law itself. When the administration of criminal justice was in its infancy, arrest for serious crime meant imprisonment without preliminary hearing and long periods of time could occur between apprehension and the arrival of the King's Justices to hold court. It was therefore a matter of utmost importance to a person under arrest to be able to obtain a provisional release from custody until his case was called. This was also the desideratum of the medieval sheriff, the representative of the Crown in criminal matters, who wore many hats including that of bailing officer. He preferred the conditional release of persons under arrest to their imprisonment for several reasons: it was less costly and troublesome; the jails were easy to breach and under then existing law the Jailer was hanged if a prisoner escaped; the jails were dangerous to health, and as there was no provision for adequate food, many prisoners perished before trial was held Purpose Of Bail - 2Influenced by factors such as these, the sheriff was inclined to discharge himself of responsibility for persons awaiting trial by handing them into the personal custody of their friends and relatives. Indeed, in its strict sense, the word bail is used to describe the person who agrees to act assuredly for the accused on his release from jail and becomes responsible for his later appearance in court at the time designated. As surety, the bail was liable under the law for any default in the accused's appearance. Purpose Of Bail - 3Between the 13th and 15thcenturies the sheriff's power to admit to bail was gradually vested, by a series of statutes, in the justices of the peace. In the case of a person committed for felony, the justices of the peace had the authority to require, if they thought fit, his remaining in jail until the trial took place, but, on the other hand, a person committed for a misdemeanor case could, at common law, insist on being released on bail if he found sufficient sureties. Writing in the mid-1700's, Blackstone described the arrest-bail procedure his day in the following passage: When a delinquent is arrested...he ought regularly to be carried before a justice of the peace...If upon...inquiry it manifestly appears that either no such crime was committed or that the suspicion entertained of the prisoner as wholly groundless, in such cases only it is lawful totally to discharge him. Otherwise he must be committed to prison or give bail; that is, put in his securities for his appearance to answer the charge against him. This commitment, therefore, being only for safe custody, wherever bail will answer the same intention it ought to be taken...Bail is...a delivery or bailment of a person to his sureties, upon their giving (together with himself) sufficien t security for his appearance; he being supposed to continue in their friendly custody, instead of going to goal. The notion of bail pending trial was not changed over the centuries. For instance, Mr. Justice Robert H. Jackson of the Supreme Court in discussing its purpose said, The practice of admission to bail, as it evolved in Anglo-American law, is not a device for keeping persons in jail upon mere accusation until it is found convenient to give them a trial. On the contrary, the spirit of the procedure is to enable them to stay out of jail until a trial has found them guilty. Without this conditional privilege, even those wrongfully accused are punished by a period of imprisonment while awaiting trial and are handicapped in consulting counsel, searching for evidence and witnesses, and preparing a defense, Admission to bail always involves a risk that the accused will take flight. That is a calculated risk which the law takes as the price of our system of justice The possibility that the accused might flee or hide must, of course, be squared with the traditional right to freedom pending trial. In order to reconcile these conflicting interests, therefore, his release on bail is conditioned upon his giving reasonable assurance in one form or another that he will appear at a certain time

Disclosing Medical Errors, How Soon The Patient And Family Member

Disclosing Medical Errors, How Soon The Patient And Family Member Disclosing Medical Errors, How Soon The Patient And Family Member Should Be Informed Who Should – Article Example Disclosing Medical Errors Insert Insert Disclosing medical Errors A medical error is a failure or inability of a planned course of action to be addressed as intended or using the wrong plan to accomplish the aim, but devoid of intentional or reckless actions that may harm the patients (NCC MERP, n.d). This paper discusses medical errors, who should be informed and how soon the patient and family members should be informed. Experts have highly encouraged professional disclosure of medical errors whenever they occur. Globally it is said that error is human, but it raises the question whether the clichà © covers such critical group of professionals or whether the errors that have been made so far are insignificant for other physicians to learn from them. Currently, there is no consensus on modalities and processes of reporting near misses. Patients require information on medical errors from an ethical standpoint so as to make informed decisions about subsequent treatments (Gallagher, 2 007, pp. 2713-2719). The greatest bottleneck to free disclosure of medical errors is the fear of increasing malpractice claims on the medical fraternity as well as vulnerability to medico-legal action. Disclosing such errors to patients themselves by the physicians may be perceived as the most straight forward affair in the making but is rather a challenging task. It raises fears of what one would expect in the following times (Wagner, 2012, pp. 63-69). The fear of going through such ordeal might make one feel less obliged to seek medical attention, and the "I’d rather not be told" sentiment from patients reveals less reacceptance of such errors. Many medical scholars have thus advocated for disclosure of such errors to family and not patients as this might predispose patients to sadness, anxiety, depression and trauma. The desired recuperation for patients might be delayed. Family members, therefore, encourage knowledge of what transpired, the consequences of an error on th eir health, the reasons for it happening, mitigation of such malfunctions, and the proper measures for the prevention of such errors in the future. Such reporting should also be timely as soon as such error is committed and noted as a possible point of professional malfunction by the physician. The family members are required to take the necessary course of action since they hold responsibility and reaction in trust of the patient (Garbutt, 2007, pp. 179-185).ReferencesGallagher, T. H., Studdert, D., & Levinson, W. (2007). Disclosing Harmful Medical Errors To Patients. New England Journal of Medicine, 356(26), 2713-2719. Retrieved April 24, 2014, from http://dx.doi.org/10.1056/NEJMra070568Garbutt, J., Fraser, V., Dunagan, W. C., Hazel, E., Marcuse, E. K., Krauss, M. J., et al. (2007). Reporting and Disclosing Medical Errors: Pediatricians Attitudes and Behaviors. Archives of Pediatrics and Adolescent Medicine, 161(2), 179-185. Retrieved April 24, 2014, from http://dx.doi.org/10 .1001/archpedi.161.2.179NCC MERP About Medication Errors. (n.d.). NCC MERP About Medication Errors. Retrieved April 24, 2014, from nccmerp.org/aboutMedErrors.htmlWagner, L. M., Harkness, K., Hà ©bert, P. C., & Gallagher, T. H. (2012). NursesÊ ¼ Perceptions of Error Reporting and Disclosure in Nursing Homes. Journal of Nursing Care Quality, 27(1), 63-69. Retrieved April 24, 2014, from http://dx.doi.org/10.1097/NCQ.0b013e318232c0bc

Financial crisis Essay Example | Topics and Well Written Essays - 1000 words

Financial crisis - Essay Example The global north was after this period walking on a financial tight rope. With the resource utilization reaching the maximum limits compounded further by a relatively high wage rate, most enterprises were feeling the pinch in the reduction of their rates of return. There are also indications that the credit crisis began in the developing nations that had began to experience financial turbulence in the early years before it eventually impacted the giant economies like the United States. With respect to these revelations and more, this paper therefore examines the causes of the credit crisis that affected the world and which its effects are yet to be fully mitigated. This essay will closely look at the major influencing factors in the global economy and that of the United States that led to the credit crisis that was experienced in the year 2004. As a precursor, the two major reasons for this crisis were internal policy framework and external influence as discussed below. Deregulation: Shadow Banking and Mortgage Securitization The main internal factor was that of the policy instruments by the government that led to further instability in the financial sector of the economy that was already unhealthy. The period before the crisis was characterized by a highly capitalist tendency that favored lack of regulation in the financial sector. Blundell-Wignall, Atkinson and Lee (3), state that by the year 2004 there were four key crisis-causing factors that came into perspective. First, the then president’s policy of making mortgages cheaper to low-income household. Secondly, the increased restriction of the sole mortgaging authority that made banks venture more into the sector and thereby increasing low value lending. Third was the publication of the Basel II accord that encouraged banks to get involved in other non-trading activities. Finally, the investment banks were given more freedom through ‘consolidated entities program’. In effect, this led to instability of economies mostly in the northern parts of the globe that depended highly on export surpluses. This created some sort of instability as Kapadia and Jayadev (35) indicate. They further state that the creation of a benchmark of currency and the isolation of the United States’ consumption sector as the last in consideration when exporting resulted into instability in the world economy. The effects of deregulation were mostly felt in the banking sector. First, the impact of disallowing the regulations that stated that demand deposits accrued interests. Secondly, the mortgage interests with relation to residential properties were lowered creating a boom in the housing sector through increased mortgage lending. Lastly, the deposit taking institutions were allowed access to the Federal Reserve through a credit window that in turn allowed non-banking institutions into the financial market that was already unstable. It was therefore inevitable that deregulation was boun d to create ‘indiscipline’ in the financial sector and that was the case. For instance, lack of proper monitoring of the banking institutions was creating an environment prone to unscrupulous deals that amounted to lose invested funds that created a recipe for future collapse of the whole lending system. Moreover, the mortgage sector was also affected

LP6- Juvenile Justice Assignment Example | Topics and Well Written Essays - 750 words

LP6- Juvenile Justice - Assignment Example However, some adverse effects may vary depending on the quantity consumed, the rate of body metabolism, and individual mood. Some of the most commonly abused drugs include marijuana, cocaine, heroin and alcohol (Bruce and Tracey 2-6). Marijuana is dry shredded leaves ranging from brown to green mixture of flowers stem and leaves of a plant termed as cannabis sativa. This type of drug in its resinous form is called hashish. Marijuana contains a chemical component known as tetrahydrocannabinol (THC), this chemical subjects the body it into euphoric state (feeling high). According to center of diseases and control (CDC), marijuana contains over 70% cancer causing substances compared to cigarettes and persistence use often lead to inflammation on the respiratory system. Several studies have also indicated that this drug causes abnormalities of the brain giving a leeway to diseases such as psychosis. In male, marijuana changes the structure of the formation of sperm cell and this may lead to infertility and it interferes with the menstrual cycle in women. The drug also causes abnormal cell division leading to premature births and is one of the leading causes of leukemia amongst newborn children. In conclusion, cannabi s increases the rate of heartbeat, interferes with the physical coordination and causes dizziness (Diane and Samantha 100). Cocaine falls amongst the addictive stimulant drugs generated from a coca plant mostly grown in South America. This drug in its processed form is known as crack. Cocaine drug is inhaled through the nostril or can be directly injected into the blood stream in form of solution. This drug increases the rate of heartbeat, nausea and enhances abnormal breathing patterns (Diane and Samantha 100). Even though cocaine is mainly associated with short term effects, its abusers often suffer from damaged nose cartilage thus leading to paranoia and abnormal breathing

The role of testimonial advertising in Fmcg sector

The role of testimonial advertising in Fmcg sector In todays intensely competitive, rapidly changing and highly complex environment characterize by diminishing customer loyalty, the need to be market -focused and customer centric is more critical and is gaining importance than any other time in past. Testimonial advertising is usually very effective and is frequently used. It is basically a promotional  method  in which one or more  testimonials  from satisfied  customers  are used. The satisfied customers may be well know or famous personality or may be a common customer. The statement of men and women who are well and favourably known in society tend to influence others in the community to buy a particular product or article which others have used successfully. Hence, the main purpose of the study is to understand the effect of this type of adverstising on FMCG industry. 1.3 SIGNIFICANCE OF STUDY The study will help to understand the impact and the importance of testimonial advertising as a marketing tool in FMCG sector. CHAPTER 2 LITERATURE REVIEW 2.1 What is Advertising Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to take some action. It is the business which draws the attention of public to goods and services. The product name is generally included in advertising. It also explains how that product could prove to be beneficial to the consumer. Advertising helps in persuading a target market to purchase or to consume a particular brand. It serves to communicate an idea to a large number of people. It attempts to convince a group a people to take some certain action. It is a type of communication who aims at informing potential customers about products and services. Commercial advertisers main aim is to increase the consumption of their  products and/or services. This can be done through branding. Branding includes the repetition of an image or product name in an effort to associate related qualities with the brand. Non-commercial advertisers spend money to advertise items other than a consumer product or service. These non commercial advertisers may include political parties, interest groups, religious organizations and governmental agencies.   With the rise of mass production , modern advertising came into existence. Mass media  can be defined as any media meant to reach a mass amount of people. To deliver the different and various types of messages, different types of media can be used. Traditional media such as newspapers, magazines, television, radio, outdoor; or  new media  like a websites and text messages can be used. 2.2 Advertising and its various modes Advertising is one of the important aspects which need to be considered in business. Advertising decides how much a product or service will be successful. Different mediums can be used for advertising purposes. Advertising promotes the product and services of a company and drive its sales. It also builds brand identity and also communicates changes of new product /services to the customers. Advertising has become an essential element. The reasons for advertising are ; New product introduced Sales increases Change in product line. Brand builing. There are various media which can be used for advertising based on the several reasons. Several b ranches of advertising can be made based on these criterias. The various categories or types of advertising are mentioned below: 2.2.1 Print Advertising The print advertising includes newspapers, magazines, brochures, fliers etc. The print media have always been a famous and popular way of advertising. It is the most convenient and the most commonly used way of advertising. Depending upon the area occupied by the advertisement and also the position of the advertisement like front page/ middle page etc, these newspapers and magazines sell the advertising space. It is also affected by the readership of the publications. Like for example the cost of giving an advertisement in a new and comparatively less popular newspaper will be less than the one which is more popular and has more readerships. The type of supplement also affects the price of the print ads. The advertisement in the glossy supplement costs much higher than normal paper. The problem of ads in newspapers and magazines is that they can only attract the readers eyes. It is not visible to a person who is not a reader. This problem can be solved by considering several factors: Use right-hand pages for newspaper adverts. The colour also plays an important role. The layout and the text are also very important parts of newspaper adverts. The layout may take the readers look at the main information, and the text is just to inform interested people. Print advertising is equally effective in creating an impact on the masses. But another problem that can arise is that it can address only the educated people. Even though there is a large section of people who indulge in reading newspapers or even simply browsing through the headlines and in the mean time they will take a look at the advertisement which will serve the purpose indeed.   2.2.2 Outdoor Advertising Another popular way of advertising is outdoor ads. It uses several different tools and techniques to attract the customers outdoor. The various types of outdoor advertising can be billboards, kiosks and several events organised by a company. The billboard advertising is the popular of all and grabs the maximum attention of the passers by. The kiosks promote the companys products. The companys can organize various events for publicising their product. 2.2.3 Broadcast advertising Broadcast advertising includes television, radio and the internet. Anything that can be broadcasted using digital means to a large mass comes under broadcast advertising. It is a very popular advertising medium. Television advertising has been popular since the time television came into existence. The duration and the time of the ads decides the cost of the ads. It helps when you want to give a very detailed information of the product. They have proved to have more stonger impact as compared to the others. The radio lost its importance to the new age media but it still remains the choice of the small sc ale advertisers. 2.2.4 Celebrity advertising The most effective way of influencing people is celebrity advertising Although a larger part of the audience has got immune to the varied claims made in a majority of advertisements, there is still a large part of costomers that still relies upon celebrities for advertising their products. 2.2.5 Public Service Advertising The advertising for social cause is called public service advertising. Public service advertising is a technique that uses ads to effectively communicate to the general public and make them aware about matters like illiteracy, poverty, AIDS, energy conservation deforestation etc. 2.3 Importance of advertising The main aim of any business is to maximize its sales resulting into a lot of revenue and profits for the company. Advertising helps in increasing the sales of any business. The second importance is that the product of a specific brand ends up becoming a household name. For example Coke or coca-cola is a house hold brand name. Same is the case of Pepsi. Such popular brand names have huge customer base that is loyal to the brand and continues to purchase the product for a prolonged time period. The craving to purchase and own a particular commodity only arises if people are aware about its existence. This can only happen if the product is advertised properly. 2.3.1 Importance of advertising in marketing Advertising helps in gaining a good loyal customer base. It not only markets the brand but also conveys the financial details about the brand to the customer. The details of pricing often tend to generate an interest in a persons mind. Discount offers often prove to be successful in advertising. Offers like buy 1 get 1 free prove to be quite instrumental for clearance sales etc and result into a spurt of sales. Hence, advertising plays a quite comprehensive role in marketing policies. 2.3.2 Importance of advertising in business Advertising not only just optimizes sales and product promotion but also creates goodwill of the specific brand which is an important asset. A very well known brand not only creates a good customer base but also a good ground to introduce new products under the same banner. The probability of people to buy the new product out of curiosity is very high. Once a good reputation is gained, it helps the business throughout the life time. The effect of one cause leads to the other. Advertising leads to awareness. When people are aware of the product they tend to pay attention to its newer advertisements and the probability that the person will buy the product will increase. Hence, we can say that advertising helps business gain loyal customers as well as a good platform in the entire market.   2.4 IMC Integrated Marketing Communications  (IMC) coordinates and integrates all marketing tools like avenues, functions and sources within a company into a seamless program that maximizes the impact on consumers and other end users at a minimal cost. Marketing efforts incorporate marketing mix. The marketing mix consists of the four Ps of marketing viz product, place, price, promotion. Promotion activities can be done in a variety of ways like sales promotion, personal selling activities etc. It also includes internet marketing, direct marketing, database marketing and public relations. There are various levels of integration such as the horizontal, vertical, external, internal and data integration. They all help to strengthen integrated communications. Horizontal Integration occurs across the marketing mix and across business functions. On the other hand, External Integration,, requires external partners such as advertising and PR agencies to work closely together to deliver a single solution. Integrated marketing communications includes online and offline marketing channels. By online marketing channels we mean e-marketing campaigns, programs, podcast, internet radio, internet tv etc. Whereas, billboards, television traditional radio mail order, traditional print etc come under offline marketing channels. IMC is a data driven approach whose main focus is to identify consumer insights and to develop a strategy with the right combination of channels to build a strong brand consumer relationship 2.4.1 Importance of IMC IMC requires a lot of efforts to ultimately deliver many benefits. It saves money, boosts the profits and sales of the company and creates a competitive advantage. It improves communications with the customer and helps them to move through the different stages of the buying process. This Relationship Marketing creates a strong bond of loyalty with the customers and helps in protecting them from inevitable competition. Retaining a customer for life proves to be a powerful competitive advantage. Because of its increased effectiveness, IMC helps in increasing profits.   IMC can boost sales by stretching messages across several communications tools to create more avenues for customers to become aware, aroused, and ultimately, to make a purchase. Finally, IMC helps in eliminating duplication in graphics and photography, which can be used in advertising, exhibitions and sales literature and thus saves money. 2.5 Testimonial advertising Testimonial advertising can be defined as a promotional  method  in which one or more  testimonials  from satisfied  customers  are used. It is a very effective form of advertising. It involves statement of men and women who are well and favourably known in the society to influence other people to buy the particular product. This is usually done by speaking good and favourable things about the product to prove the handiness of the product in use. It can be done through any form of media like print, radio, television etc. However television proves to be most successful because it involves both audio and visual components. Seeing the person use the product makes us believe more than just reading or hearing about it. Very big companies use this type of advertising as a promotional method to increase their customer base and also their profits. A few examples to testimonial advertising which proved to be very successful in the recent past are- The lalitaji campaign used by Hindustan UniLiver, or the repositioning of lifebuoy, or the media strategy used by HLL for close-up, or the brand management strategy used by dabur for vatika, or horlicks by gsk, or the desh ka namak campaign for tata salt by HLL. 2.6 Importance of customer testimonials To achieve desired behavioural response, marketers use influential marketing methods like the word of mouth communications etc. Customer reviews and testimonials prove to be very powerful when it comes to advertising and especially in case of FMCG sector. They offer a sense of security in the minds of new customers and build credibility. The most challenging task is to get your customers provide you the review which you are expecting. A good review by the customer or a good testimonial is beneficial to the customer in many ways. 2.7 FMCG industry Fast Moving Consumer Goods (FMCG) goods are also known as consumer packaged goods. They range from soaps , detergents, household stuffs, accessories etc. The items are usually the ones which come in handy in regular basis.the consumption of these products is very high and is still increasing day by day. 2.7.1 What is FMCG FMCG products usually have a high turnover ratio. They are low to medium range products. It mainly deals with the marketing and distribution of consumer goods. They are required by the consumer on daily basis and hence leads to high sales. 2.7.2 Common FMCG products Some common FMCG product categories include food, glassware, paper , pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, drinks etc. And also soaps, shampoos, cells etc. 2.7.3 Major companies in FMCG Hindustan Unilever Ltd ITC Dabur India Nestle India Cadbury India Procter and gamble Marico Industries Britannia CHAPTER 3 DATA COLLECTION This report will be totally focusing on the FMCG companies preferences towards testimonial advertising and the effect and influence of testimonial advertising on the FMCG sector. As the advertising techniques are used for the marketing of the product so the research will be done in the area of marketing. 3.1 Data sources One of the major challenges in any research is the data collection. It is not only important to collect data but also to know how to use it. There can be two types of data which can be used in any survey Primary data Secondary data Primary data is the information collected from original sources for the first time. Primary data is usually specific, relevant and is current. Its main disadvantage is its high cost and the amout of time takes. Secondary data is information that already exits which was collected by somebody for other purposes and is now available to the researcher as a secondary source of information. It gives an overview of the market. Secondary data does not take as much time as primary data and involves less cost. Secondary data is usually collected from the documents like published articles and the Internet. But internet lacks reliability. For this report I have taken secondary data sources as a data collection method. 3.1.1 Secondary Data Sources A) Literature Review To understand the general concept of advertising and how testimonial advertising is used in FMCG sector B) Internet: to gather information regarding various types of companies in FMCG Sector. C) Newspaper: it is a good medium for disseminating information to millions of people. In Newspapers, one can see the advertisement of various FMCG products. CHAPTER 4 ANALYSIS 4.1 SWOT analysis The SWOT-model ( strengths, weaknesses, opportunity, threats) gives the internal strength and weaknesses of the company It also reflects the external factors from the market . The SWOT analysis can be described as follows 4.1.1 Strengths Well known brands are present in FMCG sector. Distribution network is good Operational costs are low. 4.1.2 Weaknesses Scope of investing in technology is low. Duplication of products of well established brands. Export levels are low. 4.1.3 Opportunities High consumer goods spending Untapped market (rural). Domestic market is very large. Purchasing power of consumer is increasing. 4.1.4 Threats Import restrictions mite be removed from domestic brands 4.2 Case study 4.2.1 Lalitaji Hindustan unilever launched lalitaji in the year a 1959. She was used for the endorsement of surf. Soon after the launch of lalitaji, surf became a synonym of detergents and powders. It remained the largest selling detergent powder for long time. Then came the launch of Nirma by Karsanbhai patel. To respond to the low priced nirma, they came up with a memorable advertising strategy. It featured a middle class housewife Kavita Choudhary.soon the lalitaji could ne identified by the people even on the streets. Overnight it gained importance. She could be seen in almost every role. Like a daughter, wife, neighbour, daughter in-law, mother. It taught us the difference between sasti cheez ans asli cheez. HLLs main target was the middle class housewives. Lalitaji clearly portrayed a strong headed and strong willed character. An ironic twist occurred and soon the common lalitaji became larger than the brand itself. But later in 1980s Nirma also launced a similar figure called deepika ji. HLL later launced surf ultra with lalitaji. And then the famous ad dhoondh te reh jaoge came in the picture. Later in the 1990s HLL was backed by surf excel. The lalitaji was now a working modern women. May be a lawyer, journalist, or a business women. What was retained was her spotless white garb.the inevitable stains was reassured by those who looked at her shopping bag surf excel hai na. Lalitaji was gone but the brand clicked the segment et again. The campaign reflected the changing role of Indian women. Surf hence became generic and many people refer to detergent as surf. C:UserssonyDesktoplalitaji_surf ad.JPG Chapter 5 Conclusion 5.1 The future of FMCG FMCG is expected to grow to Rs 400,000-crore industry by 2020. The consumption pattern of people has evolved rapidly in the past few years. The consumers are curious to experience what they have not experienced till now. The quest for the new still continues. The needs are soon getting replaced by the wants. The FMCG sector witnessed robust year-on-year growth of approximately 11 per cent in the last decade, almost tripling in size from Rs 47,000 crore in 2000-01 to Rs 130,000 crore now. 5.2 Conclusion Since the FMCG sector is expected to grow several folds in the coming years, advertising in this sector will prove to be fruitful for any company. Sales are the lifeblood of any business. Without sales there would be no business. Therefore it is very important that if a business wants to succeed, it should have good sales. Advertising helps in increasing the sales of any product. Since testimonial advertising influences the people to a great extent and leaves an everlasting impression in the minds of the customer, it can prove to be a powerful tool for advertising. It is important to study the consumer behaviour and their choices especially in FMCG industry because there are several brands as options for the customer. Since the financial risk is very low in this segment the consumers do not mind switching from one brand to the other. Hence it is very important for the marketer to know the ways of marketing and advertising its products properly. Since, advertising forms such an important aspect of marketing, its study and understanding is very important. Testimonial advertising have also helped in contributing to the improvements of the advertising strategies to a great extent.