PGT Commerce Level-3 (HTEТ), Exam 2019

The marketing framework of 4Ps was suggested by E. Jerome McCarthy, whereas the 4Cs framework was suggested by Robert Lauterborn. This is shown in Table.

Major Consumer Promotion Tools:

• Samples: Small quantity, sometimes free of cost or sometimes at minimum price, sent door to door personally or through mails or with other products etc.
• Coupons: A certificate that gives buyers a saving when they purchase specified products.
• Cash refund offers or rebates: Are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. Consumer sends proof of purchase and manufacturer sends the refund part of the purchase price to the consumer.
• Price packs: Offers consumers saving off the regular price of the product, directly cuts price on the label, or combination of two products (tooth paste and tooth brush).
• Premiums: Goods offered either free or at low cost as an incentive to buy a product. Sometimes premium are costlier than the product it is sold with, (brass tray free with a product).
• Advertising specialities: They are useful articles imprinted with an advertisers name given as gifts to consumers, e.g. pen, dairy, calendars, key etc.
• Patronage reward: Cash or gift, for the regular use of a particular product of the company like privilege card membership given by the company to the regular user of the products.
• POP displays: (Point of purchase promotion) Right display at right place to attract consumers.

Difference between Capital and Revenue Expenditure:
(i) Capital expenditure is incurred for acquisition of fixed assets for use in the business, whereas revenue expenditure is incurred for the conduct of business.
(ii) Capital expenditure increases the earning capacity of the business, whereas revenue expenditure does not do so. It is incurred only for maintaining the fixed assets.
(iii) The benefit of capital expenditure extends to more than one year, whereas the benefit of revenue expenditure extends to only one year. (iv) Capital expenditure is shown in the Balance Sheet, whereas revenue expenditure go to Trading or Profit and Loss Account.

Difference Between Bill of Exchange and Cheque

According to Section 2(B) of the Indian Contract Act, 1872, when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
Offer is an open invitation by the promisor for the acceptance of the terms and conditions of the undertaking, which when accepted by the promisee becomes binding on both parties and the proposal becomes a promise. Hence the difference between an offer (proposal) and a promise lies in acceptance of the offer (proposal).

Principle of Utmost Good Faith: Insurance is a contract uberrimae fidei, i.e., a contract of utmost good faith. It means that both the parties to insurance contract should be absolutely honest to each other. The insured must disclose all material facts known to him about the subject matter of insurance.
Every fact which is likely to affect the mind of prudent insurers in deciding whether to accept the proposal for insurance and fix the premium is a material fact. Similarly, the insurer must disclose the scope of insurance which he is prepared to grant.
Good faith forbids either party from concealing any material facts which are likely to affect the judgement and decisions of the other party to enter the contract of insurance. If there is non-disclosure or misrepresentation of any material fact, the agreement will be invalid.

Under-capitalization: Reversing the concept of over capitalization, under capitalization refers to the excess of true value of assets against par value of shares and debentures. Such cases of under capitalization are very rare. It would reflect a peculiar corporate situation where the owners are interested in production and sale of the products of the company without being distracted by the favourable climate of the stock market.
Under-capitalization is the reverse of over-capitalization. This situation comes about as a result of:

• under estimation of future earning at the time of production; and/or
• an unforeseeable incease in earnings resulting from later developments;
• under-capitalization exists when a company earns sufficient income to meet its fixed interest and fixed dividend charges, and is able to pay a considerably better rate on its equity shares than the prevailing rate on similar shares in similar businesses.

Difference between Gross Domestic Product (GDP) and Gross National Product (GNP) is Net Factor Income From Abroad. Net factor income from abroad is the difference between the factor income earned from abroad by normal residents of a country and the factor income earned by non-residents (foreigners) in the domestic territory of that country.
The income earned from rest of the world by residents of a country is known as factor income from abroad. For example, if an Indian is working in US Embassy in India, his income is treated as income from abroad. Similarly, income earned by a non-resident in the domestic territory of a country, his income is factor income to abroad.
For example, profits earned by a branch of US bank in India, will be factor income to abroad.