ABSTRACT
The syllabus for section 3.4, Financial information to support marketing decisions, states that students will need to demonstrate their understanding of basic financial concepts through their appfication to marketing management decisions in a variety of contexts, Specific areas of application will include: 34A 2* Investment decisions in a marketing context using payback and discoynted cash flow techniques such as net present value or internal rate of return. Marginal costing is concerned with 8horWmedium4erm decision-making whereas capital budgeting is concerned with medium-/!ong-term decision-making, Marginal costing enables profits (contribution) to be improved in the shorWmedtum-term whereas capital budgeting enables profit to be improved in the long-term. Management information for mediom~/tong~term decision-making derives from a number
of sources, namely marketing, production, information technology, selling, and distribution, Long-term decisionmaking is strategic. Once the strategy has been decided, this will be devolved down to the management control level and then further to the operational level As has been seen in unit "Marginal costing/ the marketing function plays a key role in developing the shorWmedium4erm strategies of a company, They also play a key role In developing the long-term strategy of the company in that in both areas the focus is on the future and marketing has a strong future focus. Management accounting also has a future focus whereas financial accounting is historically focused, i„e. what has happened in the last year, mporting the annual accounts. The marketing function needs to work with other functional areas and be aware of new techniques, This awareness will enhance Mure dedsion-making, One of these techniques is Target pricing. This technique was developed in Japan and attempts to find out what the customers require, the price they require it and so on, then a required margin is deducted torn the target price to arrive a target cost. This tatget cost is then cascaded down the organization so that each area has a target cost to work to, The difference between this and traditional methods is that the components of a product or service may need to be re-engineered in order to arrive at the target cost. Management information can be both financial (quantitative) and non-financial* {qualitative), Financial information will be the main focus of this unit.
