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7/29/2019 6. Final Report of Narayan Rice Mill for Sagun
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CHAPTER-1
INTRODUCTION
1.1 Background
Narayan Rice Mill is a rice mill established in 2000 A.D. with a
view to indulge in the business of conversion of paddy into rice and
thus raise profit and at the same time behave in a socially
responsible manner.
Narayan Rice Mill is a sole trading concern, the entire
management of which is vested upon the owner namely Mr. Mukesh
Sharma. More over the concern is run by a team of 5 office
employees. The close supervision of the owner coupled with
enthusiasm and zeal of the employees provide an appropriate
platform for the operation of the concern as for as achievement of
its objective are concerned.
The mission of the concern is to be one of the major market
player in the said locality by the end of year 2008 A.D. by
enhancing its market share to 68% from its current level of 32%.
Besides this the concern also aims to behave in a social responsible
manner by initiating a scheme of educational scholarship for the
students of financially unsound background who intends to pursue
higher studies in the field of management.
The concern is situated about 2 km north of Dubai along the
Dharan- Jogbani highway. This location is ideal in the sense that its
helps the concern to reap certain benefits associated with the
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1. Expansion plans leading to increase in production level to 400
quintals of rice per day from its present level of 100 qt. per day.
2. Cost reduction plans to cut conversion cost by 30% through
adoption of cost cutting measures such as replacement of semi-
modern plans with fully modern plans conducting time and motion
study and so on.
3. Besides this the concern also aims to go public by the end of year
2007 A.D. in order to obtain resources to support increased needs
as a result of expansion.
1.2 Purpose of Field Study:
People have sought for years to define the purpose of
advertising. In his Madison Avenue, USA, Martin Mayer sounded a
skeptical note by saying: Only the very brave or the very ignorant
can say exactly what advertising does in the marker place. It is
fairly clear, however, what advertising is supposed to do. In ultimate
terms, advertising is undertaken to increase company sales and / or
profits over what they otherwise would be.
Advertising however, is rarely able to create sales by itself.
Whether the customer buys also depends upon the products, the
price, the packaging, the personal selling, the services, the
financing, and the other aspects of the marketing process.
Following points will emphasize more or make clear about the
purpose of advertising.
Information: Advertising disseminates information to target
customers. The information can be about the products brand,
uses, features, advantages, benefits, price and avaibility. The
aim is to create brand awareness and acceptance.
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Persuasion: Advertising persuades target customers to
make the purchase decision in favor of the advertised brand.
The aim is to stimulate product demand, build brand
preference and encourage purchases and brand switching. It
attracts middleman to carry the brand.
Reminder: Advertising reminds the customer about a brand.
Customers have short-lived memories about the brand name.
Frooti ads remind customers about the need for soft drinks in
summer.
Image building: Image building advertising creates goodwill
about the organization in the perception of customers. This
adds value to the products. For e.g. Sony ads focus its
SONY.
Competition: Advertising helps to face competition. It aims
to meet competition or gain advantage over competitors.
More specifically; the purpose of advertising is to enhance
potential buyers responses to the organization and its
offerings. It seeks to do this by providing information, by
trying to channelize desires, and by supplying reasons for
preferring the particular organizations offering.
There is much debate & confusion about the extent of
advertisings power to influence buyer behavior. Critics of
advertising such as Vance Packard charge that many of us
are being influenced and manipulated, far more than werealize, in the patterns of our everyday lives. Packard
believes that the scientific probing our everyday lives.
Packard believes that the scientific probing into subconscious
motives has been advertising agencies on precedent skill in
moulding buyer thought processes and purchasing decisions.
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Others dispute this position. They point to the few message
people really observe out of the thousands they are exposed
to. They point to the immunity developed by many Americans
to much of the advertising around them. They point to the
fact that advertising is only one of several influences on a
persons behavior and probably far less important-because it
is known to be self serving- than such influences as peers
and personal observation. It is difficult to know how effective
advertising is, expect in the more obvious cases. Direct action
advertising, such as mail-order & want ad advertising, serves
to stimulate immediate sales. Its effectiveness is therefore
directly measurable. Delayed action advertising purports to
build up favorable attitudes. There is little doubts that the
brand advertising of such companies as Alberto-Culver &
Revlon has been a measure factor in their success, but one
must remember that these companies also offer good
products and have good merchandising & trade coverage.
Effective advertising alone would not compensate for badproducts or other faults in the marketing program. In fact, it
can even hasten the demise of a bad product by accelerating
its use and negative word of mouth. If the firms offering is
sound, however, advertising can make a significant
contribution in the marketing process.
Various lists have been drawn of the conditions under
which advertising is likely to be a significant factor in the
marketing process. The contribution of company advertising is
likely to be greater.
When buyer awareness is minimal.
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When industry sales are rising rather than remaining stable
or declining.
When the product has features normally not observable to
the buyer.
When the opportunities for product differentiation are
strong.
When discretionary incomes are high.
1.3 Procedure of Field Study
The wide diversity of occasion for the use of advertising makes it
essential that management develop a clear conception of what it
specifically wants to achieve through its overall advertising efforts
as well as through particular advertising campaigns down to specific
ads. Defining goals is the key requirement for effective advertising
planning and the measurement of results. Yet the failure to define
advertising goals is the leading deficiency, according to the two
major studies.
The ultimate goal of advertising is to increase the firms
profitability. Because of the difficulty of measuring this, most
advertisers settle for more measurable goals. The possible goals,
ranked in terms of ease of measurement (though inversely in terms
of importance), are:
Exposure: An exposure means that a target member of the
audience was exposed to the medium carrying the ad, not that
he actually saw it. Advertisers often set the goal of achieving a
certain number of exposure per period to a target audience.
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Awareness: Advertisers would have more confidence if they
knew that the target audience actually heard or saw the ad. They
may set a goal of achieving a certain level of audience
awareness of the message. The campaigns success can be
measured through surveys collecting audience ad recall of
recognition.
Attitudes: A higher level goal occurs when the advertisers
specifies a certain level of favorable attitude he wants the
advertising to achieve in the target audience. Attitudes are of
course influenced by other things than the advertising, but the
advertiser may want to measures as carefully as possible the
attitude impact of the advertising campaign.
Sales : Companies would prefer to set a certain sales goal for
their advertising to achieve. While the actual sales impact of
advertising is difficult to isolate, some progress in measurement
is being made.
Advertising goals should be formulated by advertisers as specifically
as possible in order to guide the copy development, media
selection, and results measurement. The stated goal to create
brand preference is much weaker than to establish 30%
preference is much weaker than to establish 30% preference for
brand X among Y million housewives by next year. Colley listed as
many as fifty-two specific communication goals, including:
Announce a special reason for buying now.
Build familiarity and easy recognition of package or trademark. Place advertiser in position to select preferred distributors and
dealers.- Persuade prospect to visit a showroom, ask for a
demonstration.
Build moral of company sales force.
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Correct false impression, misinformation and other obstacles to
sales.
1.4 Methods of Data Collection
100s study is about Narayan rice mill. For the study different
sources are used:
1.4.1Primary Sources:
Primary sources are original data gathered by the researcher for the
research project at hand. Thus, these data are collected for meeting
the specific objective of the study. Primary data can be collected
through interviews, questionnaires, observation, or experiments.
1.4.2Secondary Source:
Under secondary data, data are collected through second person. Itis in the form of raw data and published materials. However the
unpublished data such as record, reports or statistics gathered or
compiled by other prior to our study are also called secondary data.
This report is based on both sources, but basically depends
upon secondary data. The data is collected from the concerned
department and annual reports of co-operative and financial
statistic published by co-operative Ltd, various articles, bulletins
and publication. Interaction is done with respective people of that
co-operative Ltd. These how all the data are analyzed.
1.5 Limitation of Study
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The main problem of the study is time, budget, availability of data
and others. We have to complete the research report within the
fixed time period. Research study is very difficult to find the fact
things due to the some limitations of the study. It affects the
financial position of the NRM. Inflation has badly destroyed firm B/S.
It is also difficult to generalize about whether a particular ratio is
good or bad.
Advertising analysis can provide useful information
concerning enterprises financial and operational conditions. There
are some limitations of this study are as under:
a. It ignores the qualitative factors.
b. Ratio doesnt consider price level change
c. It is based on secondary data.
d. The fiscal year 2007/08 is assumed as base year.
e. The data provided by the staff of NRM is assumed true and
Data are round up in figures.
f. The study is based mainly on secondary data so this study is not
Free from the limitation of secondary data.g. This study is based on past year published financial report so the
conclusion drawn by it may be misguide for future action.
h. The data used in this study are modified as per need of the study.
i. Only Limited financial tools i.e. ratios are used to analyze the
financial statements.
1.6 Significance of the Theory:
Before preparing fieldwork report we have to do various activities
which are known as fieldwork procedure. They are as follows:
Selection of field work subject
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Selection of title
Collection of data like annual report, income statements,
auditors report and various books of different writers.
After doing all these above-mentioned procedures, I went to
NRC Duhabi, where I meet the managers of office. According to
their suggestion and advice I took the annual reports of the
department stores from which I got adequate data and information,
which are very helpful for preparing my fieldwork report. For
preparing this report I contact campus their, supervisors, lecturers
and some friends and they gave me valuable information and
suggestions.
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CHAPTER -2
PRESENTATION & ANALYSIS OF DATA
2.1 Advertising Media
Media is the channel for transmission of advertising message. It
consists of the following types.
A. Print Media:
It consists of advertising done through printed materials. It is a
mass media. It can be classified into:
(a) Newspaper: They can be daily or weekly. They cover news, ideas
and
opinions about current affairs and other aspects. They are an
important and powerful tool for transmitting advertising message.
(b) Journals and magazines: They are published monthly,
quarterly, semi-anually or annually. Their target audience is specific
group of readers. They can be related to professions, culture,
religion, health, trade, entertainment & women affairs. Journal of
marketing is an example.
(c) Others: They can be directory, brochure, newsletter,
catalogue, inserts, direct mail & package print.
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B. Visual Media:
It consists of outdoor advertising that draws visual attention. It is
visible to eyes. It can be classified:
i. Billboards: They are boards with printed ads. They remain fixed in
central location or top of the buildings. They even incorporate
motions and colorful three dimensional figures to get increased
attention. Computerized billboard painting has improved their
quality.
ii. Outdoor displays: They consist of outdoor displays to attract the
attention of customers. They can be wall painting, posters, banners
& sky writing. Electric signs are also used.
iii. Indoor displays: They consist of indoor displays to attract attention
of customers. They can be point of purchase displays in retail shops.
They can be used for print of purchase display.
C. Audio Media:
It is electronic mass media. It consists of sound to attract attention.
It canbe through message, dialogue, drama, music or their combination.It can be classified into:
(a) Radio: It is broadcast media. It makes audio impression on listeners.
It is a popular media for advertising.
(b) Telephone: It is used for direct communication of advertising
message to customers. It is effective and gives personal touch.
D. Audio- visual media:
It is electronic mass media. It combines sound, motion and visual
effects. Advertising can be done to describe and demonstrate product. It
can be classified into:
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(a) Television: It is the most powerful media for advertising. Falling TN
prices, especially for those made in china, have made it easily accessible
in households. It brings family members together.
(b) Others: They can be cinema and video tapes. They have a limited
reach.
D. Internet Media:
It is a global network of computers. It is based on information
communication technology. It needs telephone and computer. It is
speedy. It has worldwide reach. Ecommerce is the outcome of internet
revolution.
2.2 Media Selection
An important part of the advertising job consists of deciding on the
best media for carrying the advertising message to the target market. The
advertiser is trying to achieve a certain reach, frequency, impact &
continuity with his advertising budget. He needs to know the target
markets media habits and the qualities and costs of different media.The selection of the major media categories will be examined first
and then the selection of specific media vehicles within these categories.
The problem of scheduling the advertising will be examined in the next
section.
The extent to which the firm should use television, radio, newspaper,
magazines, billboards, and other media depends on at least three
factors.
The target audiences media habits are the first factor to consider in
media category selection. Taking an extreme case, a company
producing toys for pre- scholar- and believing that the children rather
than their parents should be reached would say away from newspaper,
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magazines, and radio. The only medium that pre-scholars, and reaches
them effectively, is television.
The product is another important factor. The major media categories
have different potentialities for demonstration, visualization,
explanation, believability, and color. A product like Sony cameras is
best advertised through live demonstration in the television medium. A
product like dressed, where color might be important, is best
advertised in a medium like magazines.
The cost of the different media is a third factor. Television is a very
expensive medium, whereas newspaper advertising is comparatively
inexpensive. Yet what is ultimately important is not the absolute cost
differences but audience size and composition in relation to these cost.
2.3 Selecting Specific Media Vehicles
The first stage of analysis should result in a decision on how much
to spend in each media category. The decision may be made, for e.g. to
spend approximately Rs. 240000 out of a Rs. 1 million advertising budgeton magazines. But which magazine ? And how many issues of each should
be purchased ?
At this point the media planner turns to several volumes put out by
standard rate and data that provide cost, circulation, and other
information on 100s. of magazines. The prices are given for different at
sizes, color options, ad positions and quantities of insertions. Most
magazines offer quantity discount varying with the number of purchased
insertions for the year.
1. The cost per-thousand Criteria: Media planners try to
calculate the cost thousand persons reached by the particular
vehicle. If a full-page, four color advertisements in KANTIPUR
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cost Rs. 50000 and Kantipurs estimated readership is 10
million persons, than the cost of reaching each 1000 person is
Rs. 5. The same advertisement in BLAST TIMES may cost Rs.
15000 but reach only 2 million persons, at a cost per
thousand of Rs 7.50. The media planner would rank the
various magazines according to cost per thousand and place
advertisement in those magazines with the lowest cost per
thousand.
2. Computerized Media Selection: An increasing number of
agencies are using a computer program to develop their
advertising media plan. At least three different basic types of
models are in use.
I. Linear programmingII. Heuristic programmingIII. Simulation model.
2.4 Size of the Advertising Budget
Each year the firm must decide how much to spend on advertising.
Four of the more common methods in use are described below.
(a) Affordable Method: Many companies set the advertising budgeton the basis of what they think the company can afford. As told by one
advertising executive:
Why its simple. First I go upstairs to the controller and ask how
much they can afford to give us this year. He says a million and a half.
Later, the boss comes to me and asks how much we should spend, and I
say oh, about a million and a half. Then we have an advertising
appropriation.
(b) Percentage of sales Method: Many companies set their
advertising expenditures at a specified percentage of sales or of the sales
price. A rail road company executive said:
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We set our appropriation for each year on Dec. 1 of the preceding
year. On that date we add our passenger revenue for the next month,
and then take two percent of the total for our advertising appropriation
for the New Year.
(c) Competitive parity Method: Some companies set their
advertising budgets specifically to match competitors outlays that is, to
maintain competitive parity. This thinking is illustrated by the executive
who asked a trade source: do u have any figures which other companies
in the builders specialties field have used which would indicate what
proportion of gross sales should be given over to advertising?
Two arguments are advanced for this method. One is that
competitors expenditures represent the collective wisdom of
the industry. The other is that maintaining a competitive parity
helps to prevent advertising wars.
(d) Objective and task Method: The objective and task method calls
upon advertising objectives as specifically as possible, determining the
task that must be performed to achieve these objectives and estimating
the costs of performing these tasks. The sum of these costs is theproposed advertising budget.
The method has strong appeal and popularity. Among
advertisers its major limitation is that it does not indicate how the
objectives. They should be chosen and whether they are worth the
cost of attaining them.
2.5 Decision models for setting advertising budgets
In recent years various researchers have designed advanced
decision models for setting the advertising budget. These models differ in
the advertising to which they are addressed and the type and number of
variables they include. We shall review four of the models here.
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a. Sales response and Decay Models: The earliest advertising
budgeting models attempted to measure the shape of advertising
sales-response function. Given this function, the profit maximizing
advertising outlay can be determined. As for the shape itself, the
evidence is mixed. Many analysts hold that the sales/advertising
curve is S-shaped.
b. Communication stage Models: Communication stage advertising
models arrive at an advertising budget by noting its affect on
several intermediate variables that link advertising expenditures to
ultimate sales. Ule developed an example to show how a
manufacturer of a brand new filter-tip cigarette, BENSION &
HEDGES (name fictious) could establish the necessary advertising
budgets. The steps are as follows:
1. Establish the market share goal.
2. Determine the percent of the market that should be reached
by Benison & Hedges advertising.
3. Determine the percent of aware smokers that should be
persuaded to try the brand.4. Determine the number of advertising impressions per one
percent trial rate.
5. Determine the number of gross rating points that would have
to be purchased.
6. Determine the necessary advertising budget on the basis of
average cost of buying a gross rating point.
C. Adaptive- control Models: Adaptive advertising budgeting models
make the assumption that the parameters of the advertisings sales-
response function are not stable but change through time. If they
were stable, it would pay the company to make a big effort to
measure the functions as soon and as accurately as possible
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because the benefits in achieving optimization would extend far into
the future.
D. Competitive share Models: The preceding models do not explicitly
take competitors expenditure into account. Competitive- share
determination and interaction is a more dynamic phenomenon than
the foregoing discussion suggests. Competitors may adopt a wait
and see attitude towards the advertising spending level of the firm.
If the firms sales increasing significantly, competitors may increase
their own expenditures, cut prices, expand their sales force, and so
on. Each type of reaction would have a different effect on market
share.
2.6 Measuring advertising effectiveness
Good planning and control of advertising depend critically on
measures of advertising effectiveness. Yet the amount of fundamental
research on advertising effectiveness is appallingly small.
Most of the measurement of advertising effectiveness is of an
applied nature, dealing with specific advertisements and campaigns. Ofthe applied part, most of money is spent by agencies in protesting the
given advertisement or campaign before launching it into national
circulation. Relatively less tends to be spent on post testing the effect of
given advertisements and campaigns.
The research techniques used to measure advertising effectiveness
vary with what the advertiser is trying to accomplish. The behavioral
change of ultimate interest to the advertiser is the act of purchase. One
would expect to find that research on the sales effect of advertising
predominates. Actually, sales effect research tend to be meager in
comparison with communication effect research to determine the effect
of given advertising on buyers knowledge, feelings and convictions. Many
advertisers feel that the links between sales and advertising are too
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tenuous, complicated and long term to permit measuring the direct
impact. They feel instead that the more-short term communication effects
of given advertisements should be measured.
(a) Communication effect Research: Communication effect seeks to
discover whether the advertising is achieving the intended
communication effects. There are various ways to evaluate the
communication effectiveness of , say an individual ad. Called copy
testing, it can occur before an ad is put into actual media and after
it has been printed or broadcast. The purpose of ad protesting is to
make improvements in the advertising copy to the fullest extent
possible prior to its release.
There are three major methods of ad protesting:
1. Direct ratings.
2. Portfolio tests.
3. Laboratory tests.
There are two popular ad post testing methods the purpose of
which is to assess the actual communication impact of the ad
after it has appeared in the media. They are as follows:
1. Recall tests.
2. Recognition tests.
(b) Sales effect Research: Communication effect advertising
research undoubtedly helps advertisers improve the quality of
message content and presentation, but it reveals very little about
how much sales may be effected, it at all.
The sales effect of the advertising will generally be more
difficult to measures than the communication effect. Advertising
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sales effectiveness is easiest to measures in mail-order situations
and hardest to measure in brand or corporate- image building
advertising.
The media opted by NRM is clearly explained with the help of
following table:
Table No. - 2.1
Statement showing allocation of budget on different
advertisement media during past year
In Lakhs
Year Print Media Electronic Media Others Total
2007-08 2.25 1.95 0.80 5.002008-09 1.50 3.50 0.60 5.602009-10 1.20 4.25 0.50 5.952010-11 0.75 5.10 0.35 6.202011-12 0.70 5.50 0.10 6.30(Sources:Annual Report of Narayan Rice Mill)
Figure No. 2-1
Different advertisement media during past year
2.25
1.5
1.2
0.75 0.7
1.95
3.5
4.25
5.1
5.5
0.8
0.60.5
0.35
0.1
0
1
2
3
4
5
6
2007-08 2008-09 2009-10 2010-11 2011-12
Year
TotalAmount(inlakhs)
Print Media
Electronic Media
Others
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The above table and figure indicates the increase in absolute rupee
amount spent by NRM in advertisement during the successive years. It
also throws light the change in composition of the advertisement incurred
towards different media. A scrutiny of the above table reveals a major
shift in emphasis of NRM from predominantly print media to electronic
media.
The total advertisement expenditure of NRM has shown substantial
increase by about 20% since year 2007-08. The expenditure incurred
during this period on electronic media has increased by around 64% while
expenditure incurred on print media has shown a massive decline by
about 68%. This shows the growing importance of technology in the field
of advertisement.
Table No. - 2.2
Advertisement Expenditure made by NRM to increase SalesYears Advertisement Expenditure Sales
2007-08 5.00 1152008-09 5.60 1452009-10 5.95 1702010-11 6.20 1802011-12 6.30 195
(Sources:Annual Report of Narayan Rice Mill)
Figure No. 2-2Affect of Advertisement on Sales
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5.00 5.60 5.95 6.20 6.30
115
145
170180
195
0.00
50.00
100.00
150.00
200.00
250.00
2007-08 2008-09 2009-10 2010-11 2011-12
Year
Amount(inlakhs)
Advertisement Expenditure
Sales
The above table and figure reveals emphasis of advertisement on sales.
The increase in advertisement expenditure is coupled with massive
increase in sales over the successive year. This point is more
substantiated during the year 2007-08, 2008-09 where a moderate
increase in advertisement expenditure has resulted in a massive increase
in sales.
The increase in advertisement expenditure was about 20% from 2007-08
to 2011-12. On the other hand the increase in sales was by 70% during
the corresponding period.
Table No. - 2.3
Statement showing market share of NRM during passed three
years
YearMarket Share
NRM Others
2009-10 21% 79%
2010-11 32% 68%
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2011-12 37% 63%Sources:Annual report of Narayan Rice Mill
Figure No. 2.3
Market Share of NRM during passed three years
21%
32%
37%
79%
68%
63%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2009-10 2010-11 2011-12
Year
MarketShare
NRMOthers
The above table and figure epics increase in market share of NRM
with the passed of time with the increase in advertisement expenditure.
This shows the sensitivity of the market share to advertisement
expenditure.
Table No. - 2.4
Proportion of advertisement expenditure of NRM in the industry
Year Advertisement
Exp. of NRM
Others Total %
2009-10 5.95 13.05 19 31.32%
2010-11 6.20 15.80 22 28.18%
2011-12 6.30 20.70 27 23.33%
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(Source: - Annual report of Narayan Rice Mill)
Figure No. 2.4
Showing the proportion of advertisement expenditure of NRM in
the industry
32.32%
28.18%
23.33%
2009-10
2010-11
2011-12
The above table and figure reveals that advertisement expenditureof NRM relative its industry was 31.32% during the year 2009-10.It failed
to 28.18% during 2010-11 which further decline to 28.18% during 2011-
12 which further decline to 23.33%.
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CHAPTER-3
SUMMARY, CONCLUSION & RECOMMENDATION
3.1 Summary
Advertising is the backbone for any business or organization. Today
advertising has played vital role in promotion decision. Without
advertising no any organization thinks about sustaining in the market.
Similarly we can say that success key for any organization is
advertising. The passes of the time has brought absolute importance of
advertising. Before print media has taken vital place in the form of
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advertisement. Today, due to the innovation of various technologies,
electronic media has stepped forward.
So the management of the organization must be able to decide
which media should be opted. For large scale organization electronic
media will be suitable where as for small scale organization print media
will be suitable.
Therefore proper decision on the advertisement media helps in the
success of the organization.
Right media facilities organization for their success!
Wrong decision about media results in decline of the success!
3.2 Conclusion
The data collected and its interpretation reveals that there is a
change in media from print to electronic which have facilitates NRM to
increase their sales. Proper media decision has helped the organization in
establishing their name in the market locally.
After taking into consideration, all the relevant factors from the
study of advertising decision Narayan Rice Mill, it can be concluded that
proper decision related to media has helped organization to increase its
sales, and are able to satisfy its customer. The consumer with open arms
has accepted the company policy of providing quality product at a
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reasonable price. The company has to ensure its continuous performance
in proper manner.
3.3 Recommendation
1. NRM should emphasize more on qualitative aspects of
advertisement rather than simply increasing the quantum of
advertisement expenditure.
2. NRM should strive to achieve better market share to advertisement
ratio by alerting the advertisement mix in a proper manner.
3. Since the most of the output of NRM is locally consumed, it should
rely less on electronic media for the purpose of advertisement and
try to search for new alternative such as hoarding boards, using
pamplates and other locally penetrative techniques.
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