Statistics: Uses, Functions and Limitations of the Statistics

Definition of Statistics

The word 'Statistics' is derived from Latin word 'Status', German word 'Statistik', Italian word 'Statista', French word 'Statisttique' each of which means political state. In those days "Statistics" was used only in collecting the information relating to the population of the state military strength, incomes etc. for framing the military and the fiscal policies. So, at that time, "Statistics" was considered only as the science of statecraft. However with passage of time, the science of statistics has been applied very widely. So, in modern times, the scope of statistics has considerably enlarged. It is used not only to the state in administration but it is used in Economics, Science, Business, Research, Bank etc. There is hardly any place of human activity where statistics has not been used.

The word "Statistics" is used in singular as well as plural sense. In the plural sense, it means the quantitative information or numerical facts collected systematically. As for example: Statistics of population, national incomes, unemployment, poverty, exports, imports etc. in the singular sense, it means the various methods and techniques adopted for the collection, presentation, analysis and the interpretation of the figures. But to a layman, it is simply a mass of figures.

Definition of Statistics in singular Sense

A.L. Bowley has defined "Statistics as the science of counting". Again he defined "Statistics as the science of averages". There are the narrow definitions because they cover only one aspect of Statistics. The first definition is limited only in counting. No doubt, counting is used in the collection of data. But counting alone is not statistics. The second definition includes only the averages which are related to the measures of central tendency. But there are other measures such as dispersion, skewness, correlation etc. which are not less important. So, the second definition is also not complete.

Boddingston has defined "Statistics as the science of estimates and probabilities". This definition is also unsatisfactory because estimates and probabilities are only the part of statistical methods.

Croxton and Cowden have given a very comprehensive definition of statistics. The definition given by them is as follows "Statistics may be defined as the collection, presentation, analysis and interpretation of the numerical data."

This definition covers clearly the following aspects of statistics:
  1. Collection of data: For any statistical investigation, the data must be collected first. The result of the analysis and its interpretation depends upon the data collected. So, data must be collected very carefully. If the data collected be faulty, the conclusion drawn will not be reliable.
  2. Organization: The day may be obtained from different sources. If the data is obtained from the published source, it will generally be in organized form. If the data is obtained from some sort of surveys then it needs organization. The data are organized by editing, classifying and tabulating them.
  3. Presentation: After collecting and organizing the data, the next step is to present them systematically so that they can be presented in various forms such as table form, diagrammatic form and graphical form.
  4. Analysis: After the collection, organization and the presentation of data, the next step is to analyze the data. Various statistical tools like average, dispersion, correlation, test of significance etc. can be used to analysis the data. Statistical tool or appropriate technique of analysis depends upon the nature of the data and the purpose of the inquiry.
  5. Interpretation: The last step of the statistical inquiry is to interpret the result obtained from the analysis. To interpret means to drawn the valid conclusion from the data which has been analyzed. For the interpretation of data, high degree of skill and experience is necessary because if the interpretation is not made properly, fallacious conclusion may be obtained.

Definition of Statistics in plural sense

Webster defined Statistics as "Classified facts respecting the conditions of people in a given state". This definition is not comprehensive because it is limited only with those facts and figures which are related to the conditions of people in the state.

Yule and Kendall define that "By statistics, we mean quantitative data affected to a marked extent by a multiplicity of causes". This definition is also not adequate as it includes only the following two aspects of statistics (i) they are quantitative (ii) they are affected by a set of causes.

The most comprehensive and exhaustive definition of statistics has been given by Horace Secrist. He defines: "By Statistics, we mean aggregates of facts affected to a marked extent by multiplicity of causes, numerically expressed, enumerated or estimated according to reasonable standards of accuracy, collected in a systematic manner for a pre-determined purpose and placed in relation to each other."

This definition includes all aspects of Statistics. This definition has the following features.
  1. Aggregates of facts: To constitute statistics, there should be aggregates of facts. Single or isolated figure cannot constitute statistics because such figures are unrelated and incomparable. For example, the estimated population of Nepal in 1987 is 17.6 millions, is not statistics though this is a numerical statement of fact. But the estimated populations of Nepal, India and Pakistan in 1987 are 17.6 million, 800.3 million and 104.5 million respectively, constitute statistics.
  2. Affected by multiplicity of causes: The facts and figures should be affected by a set of causes. For example: the production statistics of a certain crop depends upon a number of factors such as quality of seed, weather condition, irrigation facility, fertility of soil, fertilizer used, method of cultivation and so on.
  3. Numerically expressed: Statistical methods are applicable to only those information or facts which are reducible to quantitative form. So, the constitute statistics the information or facts collected must be expressed in terms of numbers. The statements like "The oil is to be imported from India", "Nepal is rich in hydro-electricity", "Everest is the highest mountain in Nepal" etc. do not constitute statistics. But the statement that " the production of a certain crop increased by 6.5% in 1986 against 5.3% in 1985 is a statistical statement.
  4. Enumerated or estimated according to reasonable standards of accuracy: For statistical investigation, the data can be obtained either by enumeration or by estimation. If the data be collected by enumeration the data will be exact and accurate. Wherever enumeration is not possible, we collect the data by estimation in which case the data may not be accurate. Anyway, 100% accuracy in the statistical work is rare. The degree of accuracy desired depends upon the nature and the object of the enquiry. For example: In measuring the heights of individuals, accuracy will be aimed in terms of fraction of a centimeter whereas in measuring the distance between two cities Kathmandu and New York, the difference between the fraction of a kilometer may be neglected. However certain standards of accuracy must be maintained for drawing valid conclusion.
  5. Collected in a systematic manner: Before collecting the data, well plan of data collection should be prepared and the work should be carried out in a systematic manner. If the data be collected haphazardly, the fallacious conclusion may occur.
  6. Collected for a pre-determined purpose: Before collecting the data, purpose of the enquiry should be stated. The data collected without any pre-determined purpose may not be useful for enquiry. So, the purpose of the inquiry should be clear and specific.
  7. Placed in relation to each other: The numerical data collected constitutes statistics if they are comparable. To make valid comparison the data should relate to the same phenomenon or subject. For example: the data relating to the production of wheat for different years constitutes statistics because they can be compared. But the weight of a student and marked obtained by him in an examination do not constitute statistics, because in this case the data cannot be compared.
Thus, we can conclude that "All statistics are numerical statements of facts but all numerical statements of facts are not statistics."

Importance of Statistics

In ancient times, statistics was considered only as a science which was used for collecting information about population, military strength, and wealth for framing administrative and fiscal policies. But in modern times, statistical methods are used in every sphere of life. Here we discuss the uses of statistics in planning, economics and business.

Statistics in Planning

Modern age can be considered as the age of planning. No work without well planning can be successful. So, most of the organizations are resorting to plan for efficient work and for formulating policy decisions. The success of the planning depends upon the correct and sound analysis of statistical data. For example: the water supply corporation will unable to face the problem relating to the supply of water in Kathmandu valley unless the population of Kathmandu, the quantity of water required per day, the quantity of water to be supplied and by which source additional quantity of water can be supplied if necessary, is known. These are the necessary information to be collected by Water Supply Corporation. This problem can be solved through the powerful statistical tools by making use of statistical data.

Statistics in Economics

There is a close relationship between Statistics and Economics. Statistical data and statistical methods have great importance in the proper understanding of the economic problems and the formulation of economic policy. Economic problems almost always involve facts that can be expressed numerically such as production, consumption, distribution of incomes, wages, expenditures, unemployment etc. The study of economic problems requires the use of statistical methods.

In the field of consumption, statistics helps to know how the people of different classes of society spend their incomes. This will enable us to have the idea about their purchasing capacity and their standard of living.

Study of production statistics tries to make a balance between supply and demand. With the proper statistical data, statistics of production helps in adjusting the supply according to the demand.

Statistics plays a vital role in case of distribution of incomes too. The questions such as how the national income is calculated and how it is to be distributed can bitterly be solved with the help of statistical methods.

In the field of exchange, we study market prices based on demand and supply, cost of production etc. Effect in the price of commodity due to increase or decrease in supply, costs with the monopolist want to take for maximum profit etc. are the questions that can be answered with the help of statistics. Thus, exchange statistics helps in the commercial development of a nation.

Statistics have a greater importance in reducing the disparities in the distribution of incomes and wealth. The problem relating to the rising prices, rising unemployment, poverty etc. can be solved with the help of statistics.

Besides the economic policy, statistics has made a lot of development in economic theory. Economic laws such as Malthus's theory of population, Engel's law of family expenditure etc. were propounded after statistical tests. The importance of statistics in the study of economic problems has resulted a new branch known as "Econometrics."

Statistics in Business

For smooth functioning, the need of statistical information depends upon the size of the business. When the size of the business is very small, only a single person can directly engage in all the areas of business activities. He can contact the customers personally and has almost all information about the business. No technique for the supply of information is necessary. When the size of the business increases, a single person cannot contact the customers personally and look after all the business activities. He cannot get the information relating to business in the same manner as in case of small size business. Unless a very careful study of the market is made, it is difficult to have success in business. Statistics helps in formulating policies regarding the business with valid forecasts about the future with the help of tendencies based on past records.

Functions of Statistics

Important functions of statistics are given below:
  1. Statistics simplifies complexity: Statistic consists of aggregate of numerical facts. Huge facts and figures are difficult to remember. The complex mass of figures can be made simple and understandable with the help of statistical methods. Statistical techniques such as averages, dispersion, graph, diagram etc. make huge mass of figures easily understandable. So, the function of statistics is to reduce the complexity of the huge mass of figures to a simpler form.
  2. Statistics presents fact in a definite form: One of the important functions of statistics is to present the general statements in a precise and definite form. The conclusion stated numerically is definite and hence more convincing than the conclusions stated qualitatively. This fact can readily be understood by the following example: "The population of Nepal is 1981 has been increased than in 1971". There will be no clear idea about this statement. Everybody wants to know to what extent the population of Nepal has increased. But the statement that "the population of Nepal has increased from 11555983 in 1971 to 15022839 in 1981" is a definite form.
  3. Statistics facilities comparison: The science of statistics does not mean only counting but also comparison. Unless the figures are compared with other figures with the same kind, they are meaningless. Statistical methods such as averages, ratios, percentages, rates, coefficients etc. offer the best way of comparison between two phenomena which will enable to draw valid conclusion. So, statistics helps in the comparison of two phenomena. For example: The statement that "the per capita income of Nepal is $160" is not so clear unless it is compared with the per capita income of any other country.
  4. To help in formulation of policies: Statistics helps in formulating the policies in different fields mainly in economics, business etc. The government policies are also framed on the basis of statistics. In fact, without statistics, suitable policies cannot be framed. For example: The quantity of food grains to be imported in a particular year depends upon the expected internal production and the expected consumption. That is if the expected wheat production in the particular year be 701 thousands metric tons and that of consumption 710 thousand metric tons so we must import 9 thousand metric tons of food grains.
  5. Statistics helps in forecasting: While preparing suitable policies and plans, it is necessary to have the knowledge of future tendency. This is mostly in case of industry, commerce and so on. Statistical methods provide helpful means in forecasting the future by studying and analyzing the tendencies based on passed records. For example: Suppose a businessman wants to know the expected sales of T.V. for the next year, the better method for him would be to analyze the sales data of the past years for the estimation of the sales volume for the next year.
  6. Statistics helps in formulating and testing hypothesis: Statistical methods are helpful not only in estimating the present forecasting the future but also helpful in formulating and testing the hypothesis for the development of new theories. Hypothesis like 'whether a particular fertilizer is effective for the production of a particular commodity' 'whether a dice is biased or not' can be tested with the help of statistical tools.

Limitations of Statistics

Besides the importance of statistics in every field of life, it has some limitations. The following are the main limitations of statistics are:
  1. Statistics does not deal with individuals: A part of the definition of statistics is that it must be the aggregates of facts. That is, it deals only with the mass phenomena. A single item or the isolated figure cannot be regarded as statistics. This is a serious limitation of statistics. For example: the mark obtained by a student in English is 75 does not constitute statistics but the average of a group of students in English is 75 forms statistics.
  2. Statistics does not study qualitative phenomena: The science of statistics studies only the quantitative aspect of the problem. Statistics cannot directly be used for the study of qualitative phenomena such as honesty, intelligence, beauty, poverty etc. however, some statistical techniques can be used to study such qualitative phenomena indirectly by expressing them into numbers. For example: the intelligence of the boys can be studied with the help of marks obtained by them in an examination.
  3. Statistical laws are not exact: 100% accuracy is rare in statistical work because statistical laws are true only on the average. They are not exact as, are the laws of Physics and Mathematics. For example: the probability of getting a head in a single toss of a coin is ½. This does not imply that 3 heads will be obtained if a coin is tossed 6 times. Only one head, 2 times head or all the times head or no head may be obtained.
  4. Statistics is only a means: Statistical methods provide only a method of studying problem. There are other methods also. These methods should be used to supplement the conclusions derived with the help of statistics.
  5. Statistics is liable to be misused: The most important limitation of statistics is that it must be handled by experts. Statistical methods are the most dangerous tools in the hands of inexpert. Since statistics deals with masses of figures, so it can easily be manipulated by inexperienced and skilled persons. Statistical methods if properly be used, may conclude useful results and if misused by inexpert, unskilled persons, it may lead to fallacious conclusion. We have the following example consisting the result concluded by an inexpert and unskilled person.
The average height 4 members of a family is 1.56 meters and the average depth of the river is 1.06 meters. If they are willing to cross the river, they can safely cross the river.

Statistical tools used in Economics

Economics is basically quantitative. Every problem in economics contains numerical facts. For the study of each problem in economics, the following tools are to be used step by step.
  1. Collection of data: For any statistical investigation, the first tool to be used is the collection of data. The data may be primary or secondary. The collection of primary or secondary data depends upon the nature, object, scope of the enquiry, financial resource, time factor and the degree of accuracy. The result of the analysis and its interpretation totally depend upon the data collected. So, the data must be collected carefully.
  2. Organization: After completing the process of collecting the data, the second tool to be used is the method of organization. Organization of the data depends upon the source from which the data are obtained. If the data are obtained from the published source, it will generally be in the organized form. But if the data be obtained from some sorts of survey, then it needs to organize. The data is organized by editing, classifying and tabulating them.
  3. Presentation: After collection and organizing the data, the next tool to be used is to present them systematically so that they can be presented in various forms such as table form, diagrammatic form and graphical form. With the help of this tool, comparison between two can be made easily.
  4. Analysis: After collection, organization and presentation of the data, the important step to be used is the analysis of data. Various statistical tools such as averages, dispersion, correlation, test of significance, index number, time series etc. can be used to analyze the data. Statistical tools or appropriate technique depends upon the nature of the data and the purpose of the inquiry.
Completing all the above mentioned statistical tools, the next important step is to draw the conclusion obtained from the analysis. For the interpretation of data, high degree of skill and experience is necessary if not fallacious conclusion may obtain.

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Marketing concept is a new way of thinking about the organization's entire activities.

Definitely, the marketing concept is a new way of thinking about the organization's entire activities. Failure of the three concepts i.e. the production concept, the product concept and the selling concept to achieve the organizational goal forced the organizations where they went wrong. They found business slogan of "We sell what we make" inappropriate to deal the competitive marketing environment. They integrated the buyer variable in the marketing decision making and changed the business slogan to "We make what we can sell."

Related Topic:

Meaning and Features of Marketing

The marketing concept is the guiding philosophy by which organizations that have adopted a marketing orientation coordinate their activities and evaluate their success. In its fullest sense, the marketing concept is a philosophy of business that states that the customer's want-satisfaction is the economic and social justification for an organization's existence. The concept is based on the notion that the main task of the organization is to know the needs, wants and value of the target market, and then, delivering products that satisfy those needs and wants.

The major principles listed below comprise the essence of what the 1950s has become known as the marketing concept.
  1. Focus on target marketing: Organization cannot operate within one brand market and satisfy every need of the customers. So now the organization needs to focus on target market that is a group of customers whose needs can be satisfied.
  2. Consumer orientation: The marketing concept views the customer's wants and needs as primary. Through its marketing department the organization gathers market information to determine what to produce and how it should be marketed.
  3. Integrated marketing efforts: Based on the marketing information that has been collected, the organization puts together a marketing offering that includes the product, together with its price, promotion and distribution. Every department in the organization is integrated in this effort by a unified marketing orientation.
  4. Resulting profit: The effectiveness of the process as a whole is determined by the profit yardstick. When costs are deducted from sales, the resulting profit is what remains. This profit, as a percent of assets, is called return on investment (ROI). The assets represent all of the organization's capabilities (marketing, production, personal and the like) in serving the market. ROI (Return On Investment) as a sign of probability measures whether it is in the company's best interest to pursue business in one area or another.

Since its emergence in the 1950s, the concept has been continually redefined by the many changes in the marketing environment and in society at large. The concept was born out of the awareness that marketing starts with the determination of consumer wants and ends with the satisfaction of those wants. The concept puts the consumer both at the beginning and at the end of the business cycle. It stipulates that nay business should be organized and the marketing function, anticipating, stimulating and meeting customer's requirements. The customer has to be the center of the business world. A business cannot succeed by supplying products and services that are not properly designed to serve the needs of the customers. It proclaims that "the entire business has to be seen from the point of view of the customer." In a company practicing this concept, all departments will recognize that their actions have a profound impact on the company's ability to create and retain customers. Every department and every worker and manager will 'think customer' and 'act customer'. For the implementation of the marketing concept requires a complete alternation of the organizational goal and structure, internal marketing, change in authority and responsibility, relationships and a careful planning of the marketing mix.

Thus, the above explanation proves that the marketing concept is a new way of thinking about the organization's entire activities. If you have any such statements to prove marketing concept is a new way of thinking about the organization's entire activities, feel free to write comments on the post.
When an organization moves from the selling concept to the marketing concept, some strategic changes are required. It means some factors are needed for successful implementation of marketing concept in the organization. The most important factors are as follows:
  1. Top management concept: All levels of management should be supportive for the marketing concept. Top management should give the financial support to adopt the marketing concept easily in an organization and marketing department should be given facilities and authority to implement the marketing concept.
  2. Information system: Effective marketing information system should be established in an organization to determine customer’s need and satisfaction. Through the external system producer can collect one of the customer comments about the product and service. On the other hand, internal information system of the organization i.e. communication between marketing and other department should be effective to implement the marketing concept.
  3. Organization restructure: To implement the new marketing concept in the organization, organization structure should be changed appropriately. For effective implementation of the marketing concept, the marketing personnel should be involved in top level management.
  4. Appropriate marketing: To implement marketing concept, appropriate marketing functions should be done. Product should have good quality, price and promotion should be effective. Without meeting the market needs, marketing concept cannot be applied in an organization.
  5. Authority and responsibility: To motivate the marketing personnel, related authorities and responsibilities should be given to them. Marketing personnel give positive feedback, if they are given appropriate authority and responsibilities.
  6. Human resource management: For the implementation of the marketing concept, human resource department should be given the necessary training to become customer oriented and direct all the activities towards customer needs and satisfaction because the trained employees will be motivated to do the job and capability will be increased.

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E-commerce or Internet Marketing: an electronic marketing, online marketing

Meaning of E-commerce or Internet Marketing

The buying and selling through Internet is called Internet marketing. Internet is the worldwide computer network. It works as communication media. It helps to have direct contact with every individual customer. All the customers may not be equally profitable. Contact with some customers may need to cut off. So, profitable customers should be selected carefully. Internet helps in it. Similarly, Internet also helps to maintain long term relationship with profitable customers. Contact can be made with stakeholders such as suppliers, intermediaries or middlemen, competitors etc. through Internet. Similarly, Internet also helps in promotion of products, price and distribution including strategic association both at local and global levels. Internet use has become popular for the last few years. Internet marketing becomes more suitable in marketing different products such as cars, and other transport means, share, hotel booking, airways ticket booking, books, tape, magazines, dolls, clothes, equipment including many other things.

Internet marketing is electronic marketing. It helps to have direct contact between producers and customer through electronic channel. They are computer, telephone including other electronic media. Internet marketing is also online shopping. Producer, seller, bank, transportation, hotel and other organizations put descriptive catalogue on Internet or online.

Customers look at the online/Internet selects goods or services given on it and order for delivery. Customers look at the catalogue on personal computers at their homes. Suppose, any customer wants a CD player, she/he looks at all brand CDs and selects it and can buy the desired one through online service.

Internet marketing is also direct marketing. Middlemen do not work in it. The producer contacts the customers directly. Producer contacts customers one by one. In this method, commission that is given to middlemen is saved; as a result, the cost becomes less and the customers get goods at cheap price.

In conclusion, marketing done through Internet is called Internet marketing. It is also called online shopping. It helps to have direct contact between customers and producer through electronic media. As direct contact is made between customers and producer, their relationship becomes durable and strong.

Features of E-commerce or Internet Marketing

Online selling, elimination of middlemen, data depository, enhance promotion, global alliances, good relationship and need of electronic device are the main features of E-commerce or Internet marketing.

1. Online selling

In Internet marketing, products are sold through online. Producer, sellers, bank, hotel, transport and other organizations put catalogues of goods or services on Internet online. Customers look at such catalogues and demand for the goods or services of the brands which ever they want.

2. Elimination of middlemen

In Internet marketing, no middlemen can work. They are not needed. So, they are eliminated by such marketing. Customers and sellers keep direct contact with each other through this electronic media and selling and buying is completed between them. The commission that middlemen would take remains saved. Hence, the cost of the product becomes lesser. As a result, the customers get the goods at less rate of price.

3. Data depository

Internet is a data store. Millions of data can be stored and kept in it. They can be looked at taken out or studied as and when needed. Producer, sellers, bank, hotel, transport, and other organizations keep such information and the customers can easily look at them at their home on Internet.

4. Enhance promotion

Advertisement of goods or services can be put on website. Such advertisement becomes more effective. It increases sale of goods or services.

5. Global alliance

Internet is global computer network. So, it can maintain global strategic alliance in distribution and promotion.

6. Good relationship

Direct contact between producer and customer becomes possible through Internet. Such contact can be made strong and durable. Only profitable customers can be contracted through Internet. And other customers who have become burden can be abandoned.

7. Need of electronic devices

Internet marketing is electronic marketing. This needs computer, telephone and other electronic media. In the lack of such devices, Internet marketing is impossible.

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Direct Marketing: Meaning, Features and Forms of Direct Marketing

Meaning of Direct Marketing

The marketing without intermediaries is called direct marketing. In this type of marketing, the producer himself encourages or motivates the customers to buy goods or services. Direct marketing helps to establish relationship, strengthen, deepen and maintain it. Different writers have defined direct marketing. The important ones have been given as follows:

According to William J. Stanton, Michaela J. Etzel and Bruce J. Walker, "Direct marketing as using advertising to contact consumers who, in turn, purchase products without visiting a retail store."


According to Philip Kotler and Gray Armstrong, "Direct marketing is marketing through various advertising media that interact directly with consumers, generally calling for the consumers to make a direct response."

Immediate reaction is expected from customers in direct marketing. Direct mail, catalogue, telephone, television and Internet etc. are widely used in direct marketing. Recently, direct marketing has become wide and popular. Producers, sellers, service companies, nonprofit organizations, catalogue merchants etc. use direct marketing.

In conclusion, the marketing done only through advertisement without help of any middlemen is called direct marketing. In this method, sellers and customers keep direct contact through different media. Advertisement is compulsory in direct marketing. Mail, telephone, television, internet etc. make it more effective.

Features of Direct Marketing

The features of direct marketing are: no middlemen, customer oriented, various forms, direct distribution channel and direct contact between producer and customers etc.

1. No middlemen

In direct marketing system, selling and buying take place keeping direct contact between marketers and customers through different media. So, no middlemen are found in this marketing. Since no middlemen work in it and no commission is given to them, the cost is saved and the customers can get goods at the cheapest price.

2. Customer oriented

In direct marketing, relationship between sellers and customers becomes deep as well as strong. The sellers give emphasis on the wants, desires of each customer. It is one-to-one marketing. As the producers remain in direct contact with customers, they make marketing mix keeping the customers at the center.

3. Forms

The channels which help to conduct direct marketing are taken as its forms. So, there are many forms of direct marketing. They are direct mail, and catalogue marketing, telemarketing, television marketing, Internet marketing, etc. Any of these forms can be direct marketing.

4. Direct channel

Marketing channel becomes direct in direct marketing. In this marketing channel, no middlemen can be found. The producers themselves deliver products to the customers directly. Customers also keep direct contact with producers or distributors through different media. Selling and buying take place directly between them. As the channel becomes short in this marketing, distribution cost also becomes least.

5. Direct contact

There is direct channel in direct marketing. Since no middlemen remain in this form, direct contact is established between sellers and customers. Producers can keep contact with customers one by one. This makes easy for the producers to know about the purchasing power, wants and interest of the customers. Direct ransacking taking place. Distribution cost is also reduced due to direct channel of distribution.

Forms of Direct Marketing

The forms of direct marketing are direct mail and catalogue marketing, telemarketing, television marketing and online shopping. This is made clear by the following figure:-

1. Direct mail and catalogue marketing

a) Direct mail marketing: The main form of direct marketing is direct mail marketing. Products can be delivered to the selected customers through post office, courier, fax, e-mail etc. Defining direct mail marketing, Kotler and Armstrong say, "Direct-mail marketing through single mailings that include letters, ads, samples, foldouts and others sales people on wings sent to prospect on mailing lists." Help of customers' list is taken to prepare mailing list. While sending mail to thousands of customers, it costs more than other channels. However, it has proved completely successful in sending books, magazines, donation, insurance etc. Direct marketing is being widely used to send new products, gifts, clothes, food grains, industrial goods etc.

b) Catalogue marketing: Producers prepare catalogues of different products and send them to selected customers through different channels, especially through mails etc. The customer's order for goods after studying descriptive catalogue.

Defining catalogue marketing Kotler and Armstrong have said, "Direct marketing through catalogue that are mailed to select list of customers or made available in stores." If anything is needed to ask, telephone is used in catalogue marketing.

2. Telemarketing

Using telephone to have contact with customers to sell any product to them directly is called telemarketing. Defining telemarketing, Kotler and Armstrong have said, "Using the telephone to sell directly to customers is telemarketing." Call center is arranged for receiving customers' calls. In this marketing, sufficient information is given to the customers to make selling easy and all information about goods or services is given through telephone. However, telemarketing has also troubled the customers. So, Association of Telemarketing has said, "We want to target people who want to be targeted." Nowadays, cellular phone has become more popular.

3. Television marketing

Using television to sell any product directly to the customers is called television marketing. There are two forms of television marketing. They are Direct Response Advertising and Home Shopping Channel. Magazines, books, CD, tape and other products are suitable for first form and second form is suitable for ornaments, dulls, clothes, equipment, electronics and other products. Quality Value Channel (QV), Home Shopping Network (HSN), Value Club of America etc. are the major Home Shopping Channels of the world.

4. Online shopping

Online shopping is electronic marketing. It is also called Internet marketing. Producer, seller, bank, transport, hotel and other organizations provide descriptive catalogue of products through computer online. Customers look at the online messages in computer and demand for wanted products staying at home. Suppose, if any customer wanted to buy CD player, she/he can look at all brand CD players in computerized catalogues and can select any of them. Defining online shopping, Kotler and Armstrong have said, "Shopping through interactive online computers services, two-way system that link consumers with sellers electronically." Online shopping has remained at its infancy as yet. Online shopping system has not become so successful as expected due to lack of low number membership and less use of computers. But, CompuServe, Prodigy, and American Online are successfully operating.

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Relationship Marketing: Meaning, Levels and Approaches of Relationship Marketing

Meaning of Relationship Marketing

Long-term partnership between marketing expert and customers is called marketing relationship. It maintains satisfactory relationship with customers to earn long term goodwill and maintain it. Creating maintaining and increasing good and strong relationship with customers and stakeholders is relationship marketing.
Relationship marketing includes increasing strong relation with customers, keeping contact and enhancing it. Relationship marketing gives emphasis on establishing valuable relationship and creating delivery network with them rather than personal dealings. Relationship marketing is long term oriented. 

The main objective of relationship marketing is to continue long term delivery to the customers and measure their satisfaction. All the departments of a company should work as a group with marketing to provide services to the customers. Relationship should be maintained with economic, social, technical and legal sectors. It helps to increase the reputation of the company and its products or services. In relationship marketing, marketers and customers work together to identify customers' wants and needs and meet those by updating them in marketing mix.

According to Philip Kotler and Gary Armstrong, "Relationship marketing is the process of creating, maintaining and enhancing strong, valued-laden relationship with customers and stakeholders."

For the last some years, the companies have realized the importance of relationship marketing and are practicing it. Nowadays there are many customers, they are living and spreading all over the world. They want such suppliers who can provide goods at any place, any time and can solve problems and bring improvement in quality of the products living nearby them. Relationship marketing fulfills these wants of the customers.

Levels of Relationship Marketing

Different levels are created while buying goods by the customers. They are: basic level, reactive level, accountable level, proactive level and partnership level.

Levels of Relationship Marketing

1. Basic level

At this level, the seller sells products to the customers. But do not establish relationship with them anyway. They only sell products to them.

2. Reactive level

At this level, the seller of the company sells goods to the customers and encourages them to ask if they have any problems and questions. At this level, the sellers become ready to solve problems of the customers after selling goods.

3. Accountable level

At this level, the seller phones the customers a short time after the sale of check whether the product is meeting the customers' expectations. They solicit for suggestions if any improvement is necessary.

4. Proactive level

At this level, the seller and other employees phone the customers from time to time with suggestions about improved product use. They find out whether the customers are satisfied with the improved products or not. If they are not fully satisfied, they will ask for suggestions and advices.

5. Partnership level

At this level, the company works regularly with the customers to find out methods for delivery of products. At this level, the company takes the customers as partners.

Approaches of Relationship Marketing

Financial benefits, social benefits and structural ties are the approaches of relationship marketing. They are made clearer by the following figures:- 

Approaches of Relationship Marketing

1. Financial benefits

The first approach is to provide financial benefits to the customers to strengthen relationship with them. For example, an airline may give special discount to its regular customers by scheduling regular flights. Hotels may provide special discount to their regular customers. Similarly other business organizations may provide discount or prize to their regular customers. Some organizations provide several facilities to their regular customers by giving them membership of their club. Strong and deep relationship can be established with the customers by giving such financial benefit.

2. Social benefits

The second approach of relationship marketing is social benefits. Relationship with customers can be strengthened by providing social benefits to them. Business company develops personal relationship with the customers for the same purpose by this approach. It confers them social respect and recognition. The company identifies wants and necessities of personal customers, and makes marketing mix accordingly. Besides financial benefits, the social benefit strategy strengthens relationship with customers as well.

3. Structural ties

The other important approach of relationship marketing is structural ties. Its main objective is to involve customers in organizational structure. In order to develop effective relationship with customers, special equipment or marketers supply with special equipment or computer linkage that help them manage their order, payroll and inventory. Electronic Data Interchange (EDI) should be developed. The medicine wholesaler, McKesson Corporation had invested millions of dollars to develop EDI to systematize inventories, orders and shelf space of small pharmacies. That means, a company should even spend much capital to establish strong relations with customers, maintain it and involve them in the structural tie.

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Quality Marketing: Tools and Requirements for Quality Marketing

Meaning of Quality Marketing

The age of today is the age of quality. The producers have become aware to produce quality goods or services in order to get success in competition. Quality is such a factor which increases costs if quality is increased, whereas quality declines if production cost is decreased. So, balance should be maintained in production cost and quality.
For this, the producers should study and understand the consumers' interest, wants, purchasing power and competitors' position carefully.

The sum of features and utilities of any goods is called quality. The quality of goods satisfies the consumers' wants. Reliable service, long lastingness, favorableness, workmanship, aesthetics, composition etc. are the qualities of products. Quality of all goods does not become same. Different goods of different qualities are produced according to the needs, wants, interest and purchasing power of the customers.

Goods of different quality may be produced to meet the same need. Different writers and scholars of marketing have defined quality; the important definitions among them are given as follows:
According to Dr. R. Spriegal, "The quality of a product may be defined as the sum of a number of related characteristics, such as shape, dimensions, composition, strength, workmanship adjustment, finishing, and color."
According to American Society of Quality Control, "Quality is the total of features and characteristics of a product or services that bears on its ability to satisfy stated or implied needs."
Hence, it becomes clear that quality of product is the sum of characteristics inherent in it. Cost, performance, reliability, workmanship, long-lasting, aesthetics etc. are the aspects of quality. Strategic commitment, involvement of employees, quality of products, technology, quantity, methods etc. affect quality of any product.

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Concept of Quality and Total Quality Management (TQM)

To implement the concept of Total Quality Management (TQM) in marketing is called quality marketing. This plays an important role to satisfy customers. Decision on how to implement the decisions taken to increase the quality of product or service should also be taken. Quality of goods is the very important issue being faced by the sum of efforts made by an organization to increase quality of products or services. TQM pays special attention towards satisfying customers. Quality circle, training, customers' views, strategic role, bench marking, statistical tools, technology use etc. increase quality. Strategic commitment, employee involvement, quality materials, new technology, improved method, group effort etc. are the major elements of quality marketing. In the absence of such elements quality marketing becomes impossible.

In conclusion, the sum of characteristics and utility of the goods or services is called quality. To implement the concept of Total Quality Management in marketing is called quality marketing. So, quality marketing makes efforts to increase the quality of the goods or services. It also denotes the quality of goods or services, quality of distribution and distribution channel and quality of after sale services. Quality marketing uses different tools to increase quality of products or services.

Tools for Quality Marketing

Quality marketing is customer oriented concept. It gives priority to customers' satisfaction. Goods or services as wanted and desired by the customers should be made available at right place, at reasonable price and at right time to satisfy the customers. This is the main philosophy of quality marketing. The main tools for quality marketing are as follows:-

1. Quality circle

The quality circle is also called quality control circle. Quality circle is an important tool of marketing. This was developed in Japan in 1960s with a view to providing suggestion to the high level management. Quality circle is the group of employees working in same organization. Such group may consist of 5 to 12 members. This group works regularly to increase quality of the product. As experts of different subjects are involved in such group, it becomes very effective. The group members know the method of solving any problem, methods of using technology and method of performing any work in group with responsibilities. So, the quality circle is the group of employees who get together, hold regular discussions on the quality related issues, find out reasons, recommend solution and take reformative steps. The working process of this group becomes stepwise. Identifying problems, selecting problems, analyzing problems and recommending the right solution is as a whole the working process of quality circle.

2. Training

Responsibility for quality improvement should not be left on any single person or single department. All the persons involved in the organization should be active and involved in it. All the employees from chief executives to the lower level workers should know about the quality of products, and all of them should be committed to achieve it. For this regular training should be given to the employees. Quality is compulsory for success. All the employees should know the necessary conditions for quality and should be given knowledge how it can be achieved. What is quality? Why is it necessary? How can quality be achieved? Who are responsible for maintaining or increasing quality? All such things should be made known to the employees through training.

3. Consumers' ideas

Quality of products or services is for consumers. So, the quality should be as expected by the consumers. They are wise and rational. They know everything about goods or services. Their help becomes very important in developing new product, adding new characteristics to any products. So, their ideas should be collected, analyzed and quality of goods should be produced accordingly. Various ideas of many consumers should be collected and the best idea should be implemented to maintain the quality standard, and make qualitative improvement in any product compared to competitors' products. As a result, the products become marketable.

4. Strategic role

The other important tool of quality marketing is strategic role. The marketers should get the opportunity to play strategic role to make quality goods. If such role is not available, the function of quality remains limited in papers. Quality should be in goods but not in advertisement. The marketers should make goods or services qualitative playing strategic goal.

5. Statistical tools

The measurement of the quality of goods or services is its level and regularity. Quality has different levels. They should not be distorted but be maintained regularly. If high quality goods have been supplied to markets once, quality of the same goods should not be decreased later on. So, statistical tools can be used for giving regularity to the quality. If quality has been regularly maintained, the customers feel satisfied. As a result, organizational success can be achieved.

6. Benchmarking

Benchmarking is the process of learning how other firms do exceptionally high quality things. If any competitor has produced high class goods and has given regularity, the process of learning their method and imitating them is called benchmarking. The concepts of benchmarking are simple and easy. From this good method of others can be learnt and used.

Requirement for Quality Marketing

Quality marketing is the demand of time. Strategic commitment, involvement of employees, quality materials, new technology, improved method and group efforts are needed for quality marketing.

1. Strategic commitment

Strategic commitment is a necessary element of quality marketing. Top level management should be strategically committed to producing quality goods. Such commitment brings changes in the culture of organization to adopt the quality as its goal, not as an ideal. As a result, there comes stability and regularity in the quality of goods or services.

2. Employees' involvement

The other important element of quality marketing is the involvement of employees. Quality is not a responsibility of any single person or department; it is the result of group efforts and commitment of all the employees working in the same organization. So, all the employees should remain effortful to produce quality goods. Considering this fact, the top level management should involve all the employees in the campaign or mission for quality production.

3. Quality materials

Quality cannot be achieved only through involvement of employees and strategic commitment. For this quality materials are also needed. If the input materials are of low quality, final goods also become of low quality. So, quality materials should be used to maintain quality of any products.

4. New technology

New technology is found improved every time. So, it becomes necessary to produce quality goods. The quality of the goods produced by using new and high technology becomes uniform and has reliability. US auto and Electric Firm has invested much amount in developing new technology to enhance quality.

5. Improved method

Quality cannot achieve only strategic commitment, employees' involvement, quality materials and new technology. For this improved method is also needed. The process of production becomes flexible in improved method. It should be easy to change according to the changes of environment.

6. Group effort

Evolvement as well as commitment of all employees becomes essential to increase quality and maintain regularity in quality. A group should be formed involving the persons who are able to solve problem, use new technology, use statistical tools and work in group. This group is called quality control circle. Such group can be formed involving employees from different departments. The group is given special rights and responsibilities for quality control. This group works to maintain quality, promote it and keep regularity. So, group effort is compulsory for quality marketing.

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Promotion Decisions in Nepal for Successful Marketing

The promotional works give information to target market about the organization and its products, influence them and remind them about the company and its products. Promotion gives complete information to the prospective customers about quality of goods, price, using/handling methods, benefits etc.
Like in other countries, the customers are provided information about products, so is in Nepal also. Promotion is an important element of marketing. Its role is increasing daily. The main elements generally used in practice are as follows:

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Meaning and Objectives of Promotion

1. Advertising

Sellers make various artistic presentations in order to sell their goods, the same is called advertisement. It makes flow of information about goods or services and gives necessary information and knowledge and reminds the customers of the goods or service. So, advertisement has become very popular in promotion of goods or services. This generally used by business firms, social organizations, government and governmental organizations. In order to have mass selling, mass communication is necessary. Nepalese entrepreneurs/producers use different types of advertising media which are mentioned as follows:

a) Print media:

Print media are used to give information to the customers or consumers about products or services. This media include newspapers. Notice, attitudes, ideas/views, descriptions etc. can be published. The many potential customers study such materials. Gorkhapatra, Kantipur, Nepal Samacharpatra etc. are its examples. A large number of customers or consumers look at such newspapers in city areas. But in remote villages, the customers or consumers cannot read such materials since most of them are illiterate.

Magazine is also included in print media. Information about goods or services can be given to the customers or consumers by publishing poems/verses, articles, notices, descriptions etc. in commercial booklets, fortnights, bulletin, journal etc. Such publications attract attention of all customers. House magazine, business journal etc. of the Chamber of Commerce and Industry, Nepal, Himal, New Business Age Core Express, are some examples of Nepalese magazines. Information, advertisement and messages of business firms become comparatively long, descriptive, analytical and explanatory in such type of print media. They may be difficult to understand for the customers living in villages.

b) Audio media:

Information and messages about goods or services also can be broadcasted/ disseminated through radio. So, this medium is also called radio advertisement. Consumer goods, sports goods, household goods, small equipment, etc. are advertised. Radio advertisement has become very popular in Nepal. All the potential customers of all parts of the kingdom can hear and understand notices, messages, description, etc. at a time. So, the Nepalese business firms give priority to radio advertisement.

c) Audio-visual media:

Audio-visual medium is also used to advertise goods or services in Nepal. Information is given about the quality, utility, price, benefits, using methods etc. of the goods which is intended to sell. Colored pictures, scenes of the products are attractively presented decorating at right place through this modern media. Such type of presentation attracts potential customers and wins their heart. Nepal Television is the strong example of audio-visual media in Nepal. Nowadays advertisements are given in front, in the middle and in the end of news.

d) Visual media:

Information and messages about goods or services can also be communicated by pasting posters. Posters can be prepared by writing or printing information or messages with colored pictures and pasted on walls, public places etc. Posters attract the attention of the customers. Such posters are also pasted and exhibited at Tripureshwor Stadium, Pokhara Stadium, Airport, Highways, Bypass roads bus stops etc. Advertisements can be made through bill boards, hoarding boards, etc. at different places such as airport, bus stops, super markets and other important public places. But such boards are located only in some city areas. Electrical signs are also used for advertising goods. Generally, such advertising media are in practice in Nepal.

2. Publicity

The function of providing information and messages about products, company's policy, programs etc. without any fee to the customers is called publicity. Such publicity is made by other sectors than the concerned organization. Such advertisement done through any person, organization, or group becomes reliable and trustworthy for the customers. This type of publicity has also become very effective as well as popular in Nepal. Programs such as press conference, display/exhibition, inauguration by ministers or socially respectable persons etc. are also used for publicity. Organizing annual ceremony of business firm, presenting annual reports etc. also become effective to publicize any company's products or services. This method of advertisement is also practiced in Nepal.

3. Personal Selling

Personal selling is also an important as well as effective tool for promotion. In this method, customers are directly contacted and communicated the messages about company and products. Potential customers are met and the goods are described to them. This is also supposed to be very effective means of promotion. It creates demands in potential customers. The personal seller should be skillful. Personal selling is Nepal has become effective in city areas and has begun to enter in some villages.

4. Sales promotion

Besides personal selling, advertisement, publicity, propagation, and other activities can also be conducted for sales promotion. Among them efforts for creation of demand, promotion of company etc. can be taken. Consumers' promotion, trade promotion, sales force promotion etc. methods should be used to make it effective. Gifts, price-off discount coupon distribution etc. can be provided to attract customers towards goods or services. Most of the Nepalese businessmen have used these methods.

Trade promotion is the second method of trade promotion. In this method, middlemen/intermediaries and channels are encouraged. Allowances, cost free goods, price cut/discount facilities are given to different channel members and sellers to encourage them in selling. Producer can also encourage dealers, wholesalers and retailers by providing facilities. Such activities have become successful to increase sale quantity in target markets in Nepal. Sales force promotion is the third method of sales promotion. It encourages the manpower/sales force involved in selling. The employees/sales forces are encouraged through arrangement of gifts, bonus and commission, sales contest etc. The promotional methods become very effective in sale of goods or services. So, most of the business organizations have used these methods of sales promotion.

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Public Relation in Marketing for Maintaining Image or Reputation of the Company

Meaning of Public Relation

The institutional advertisement done for maintaining image or reputation of the company is called public relation. Public relation is an important tool for sales promotion. In order to maintain image of the company, different promotional programs are conducted. Such programs can have positive effect on target group or potential customers.
This communicates true information to customers, distributors, employees, local communities, suppliers etc. about the company and its programs through different media.
According to Prof. William J. Stanton, "Public relation is a management tool designed to favorably influence attitude towards an organization, it s products and its policy."
This definition makes it clear that public relation creates an environment to understand the company's programs, policy and strategy positively. Such views, expression or attitudes may come out through books, writings, press or house publication.

Generally, the task of presenting positive information or news about organization is public relation. It tries to make wide publicity about products by seeking sponsors. Besides this, public relation establishes good understanding between organization and people. Similarly, it provides true information, suggestion, advice etc. about the issue of public concern and position of the company. So, public relation is very important.

Nature of Public Relation

In this modern age, public relation is very important task of marketing. It is used for the bright future of a business organization. It creates positive environment/atmosphere for conducting business. It also maintains good understanding between customers and company. It has its own nature and forms which are mentioned as follows:

1. Press relation

News and information about the organization are disseminated through press media. Press media publish positive aspects of the company. While giving true and factual description of the company, the company gives emphasis on its objective, philosophy, policy and programs. Here press media means, specially, booklets, pamphlets, reports, literary writings, magazines etc. The main role of articles is also to point out the form of public relation. Similarly, both the house and outside publication can strengthen public relation.

2. Public service relation

Publicity about company's activities can be made through different sponsors. This can establish public relation without cost or with little cost. Similarly, any organization may help to disseminate information to promote understanding. The tactical policy of influencing parliament, government or rules and regulations, legal provision and helps in promoting them also serve public relation. It helps to heighten the image of the company. Counseling, suggestion, advice of any party or group may greatly help management. Similarly, raising voice for the interest of public and related subjects also helps management. Such nature appears in the public relation. They also become beneficial to the company.

Objectives of Public Relation

Public relation/contact plays an important role in creating positive image of the company. This task gives effective confidence to the local community, customers, employees, stockholders and government. Such creative activities need some objectives which are mentioned as follows:

1. Awareness

Public relation provides sufficient information and news about any company and its products. It also provides sufficient information about the company's leadership and its role. This makes concerned sides aware. So, marketing expert should determine awareness as its first objective.

2. Established Credibility

Various information and news about the company and its products are provided through different media such as newspapers, magazines etc. The editorial columns provide real position of the company. This gives confidence to the concerned sides of the company and products.

3. Creation of favorable/positive image

Public relation creates positive image of the company. This also encourages the manpower and dealers engaged in selling. They feel proud thinking, "We are involved in dealing in quality goods of reputed company." This encourages the employees to discharge their duty successfully and play important roles to maintain good image of the company.

4. Reduction of promotion cost

Leaders, opinion, researchers and publisher carry out informative articles about the company. This costs much lesser cost than the cost for advertisement. The saved promotion cost can be used in other works. So, the objective of public relations is to reduce/minimize the promotion cost.

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