A Hilarious Dive into the World of Financial Analysis

Financial analysis, a domain traditionally perceived as a bastion of numbers, spreadsheets, and financial jargon is full of stress and anxiety but today we will not be talking about the stress and anxiety-related aspects of financial analysis. Financial analysis may be a domain of numbers and statistics, but it’s not devoid of laughter and absurdity. In the world of financial planning and number-crunching, a good laugh can be as valuable as a well-balanced portfolio. Let’s look at some of the instances where financial analysis does not give you those scary charts and numbers to ponder but rather gives you a reason for a laugh –

Finance Analysis Humor and Laughs

Vagaries of Climate

Some financial analysts claim to predict the economic climate with the same confidence as meteorologists predicting the weather. If only the two were equally accurate.

Decimal Point Dilemma

Picture this: a meticulous financial analyst, buried deep in a spreadsheet, unwittingly removes a decimal point which can result in an astronomical profit or a bankruptcy of a company, depending on the context.

Secret Society of Finance Professionals

There’s always that one colleague who seems to possess an otherworldly ability to predict earnings with mysterious charts and enigmatic hand gestures as if they’re part of a secret society.

Cash Flow Magic

Cash flow statements often resemble magic shows. Cash disappears from operations, reappears in financing, and then vanishes again. Accountants are like the audience, trying to figure out where the money went, enjoying the mystery along the way.

The Great Typing Error

Typing Error – A simple typo can turn “net income” into “not income,” creating moments of sheer absurdity in the boardroom as well as in the minds of finance professionals.

EBITDA

EBITDA, the acronym for Earnings before Interest, Taxes, Depreciation, and Amortization, can be translated into Every Bag Is Taking Delightful Adventures. So, the next time you see EBITDA on your financial statement, just remember, it might also stand for the exciting tales of your traveling bags

Misplacing Cell Reference

Misplacing a cell reference in Excel can turn a sensible formula into an enigmatic code. It’s like when you want to swim on a beach and use Google Maps but Google Maps takes you to a swimming pool instead of the beach.

Shakespearean Play

The suspense that builds before a financial analyst announces a company’s earnings often rivals a dramatic pause in a Shakespearean play. Will the earnings be tragic or comic?

CAGR – Caffeine Addicted Growth Rate

CAGR, or Caffeine-Addicted Growth Rate is the rate at which your coffee addiction compounds annually. It’s the statistical measure of how many more cups of coffee you’ll be sipping next year compared to today. Whether it’s espresso, cappuccino, or a simple brew, CAGR tells you just how much deeper you’re diving into the world of coffee year after year. So, next time some financial analyst friend of yours talks about CAGR, you can smile and say, “Ah yes, my CAGR in coffee is out of this world!

While the above take was just for fun for people who are into financial analysis as financial analysis is a very stressful topic I hope the above take of financial analysis on a lighter note has helped you in taking some stress out of your tough job.

6 Differences between Internal Audit and Internal Check

Internal audit and internal check are two terms that are often used interchangeably when one talks about the financial working of the company. While both internal audit and internal check are essential components of an organization’s internal control system, they serve different purposes and have different methodologies, scopes, frequencies, and reporting structures. In order to get a better understanding about both concepts one should look at some of the differences between internal audit and internal check –

Internal Audit VS Internal Check

Meaning of Internal Audit and Internal Check

In the case of human being, we go for yearly checkups to ensure that our body is healthy and all the vitals of our body are good in the same way companies have an internal audit done by internal auditors to make sure they are doing things the right way and following all the rules. While the internal check is done by the company themselves in order to check that their work is accurate and follows the rules. In simple words just like in school before submitting any school project we verify two times so as to ensure that there are no mistakes in our project in the same way companies do internal verification of their work.

Goals

The goal of internal audit is to offer a neutral and unbiased evaluation of the company’s operations, financial reporting, and adherence to various legal and regulatory requirements while internal checks are performed to make sure that transactions done by the company during the year are accurate and complete. It also helps in making sure that organizational rules and procedures are being followed while doing financial transactions.

Scope of Internal Audit and Internal Check

The scope of an internal audit is very wide as it is a comprehensive evaluation of the organization’s operations as well as the working of the company while the internal check is more focused and has limited scope in the sense that it concentrates on specific areas of control and not the whole system of the company. In simple words, an internal audit goes deeper into the company’s operations to identify risks and provide recommendations to improve controls while the internal check is more superficial and limited in scope.

Frequency

Internal audit is done periodically which is usually every financial year while in the case of an internal check, it is carried out daily in most of the companies as this is an internal process and hence can be done on a regular basis.

People Involved

In the case of an internal audit, this audit is done by internal auditors who are usually from outside the company and report directly to the audit committee or board of directors of the company while the internal check is carried out by employees within the organization who report their findings to the top management. In simple words just like in the case of movies when the movie is ready for release then producer of the movie screen the movie to his or her friends circle and family members who give internal review about the movie then this is similar to an internal check while the same movie when screened to independent movie reviewers than this is similar to internal audit.

Qualification

Internal audit is responsible for ensuring that the organization’s internal control system is effective, efficient, and in compliance with laws and regulations hence internal audit requires qualified individuals having specialized knowledge and skills in auditing, accounting, and risk management while in case of an internal check, it is responsible for ensuring that transactions are accurate, complete, and in compliance with company’s internal policies and procedures, hence it does not require any major qualification rather it requires a basic understanding of the company’s policies and working style.

As one can see from the above that both internal checks and internal audits are miles apart when it comes to the purpose, meaning, and requirement of both concerned and that is the reason why companies usually go for both internal checks as well internal audits when it comes to checking the transactions and financial statement of the company.

6 Differences between Merger and Amalgamation

Merger and amalgamation are the terms used in the context of financial markets. We all have seen avengers movie where two or more superheroes join hands to fight a villain in the case of the corporate world similar thing happens when two companies come together either through merger or amalgamation to form a bigger company and take on the villains which in case of companies are the competitors. In order to get a better understanding of both terms one should look at some of the differences between merger and amalgamation –

Mergers Vs Amalgamation

Meaning of Merger and Amalgamation

A merger is a process in which two or more companies combine to form a new company, in simple words in the case of merger two companies that are in the same business decides to come together as both companies are more or less of equal size and business. While an amalgamation, on the other hand, is when one company takes over another company, and the two companies become one. In the case of amalgamation, the company that’s taking over is more powerful and bigger and hence after amalgamation, the amalgamated company becomes even bigger and stronger.

Ownership of New Company

In a merger, the ownership of the new company is divided between the companies involved based on the value of their contribution as in a merger, both companies contribute their assets and liabilities to the new company, while in an amalgamation, the shareholders of the acquired company become shareholders of the acquiring company as in the case of amalgamation bigger company acquires the assets and liabilities of the smaller company.

Future of the Company

In case of a merger, both companies merging will have no future as both companies cease to exist and a new company is created which will have a different legal status, different brand name, and so on while in case of amalgamation, it is the acquired company which cease to exist and acquiring company will continue to operate with same legal status and the same name as before. In simple words, a merger is a complete overhaul of the companies involved while amalgamation is only a partial overhaul of the companies involved.

Impact on Competitors

In the case of merger, competition is partially removed in the sense that when two competitors merge together a new company is formed and hence there is only a partial reduction in the competition while in the case of amalgamation when acquiring company acquires another company the competition from acquired company is completely finished as the acquired company is amalgamated into the acquirer company.

Market Share

In case of a merger the market share of the market is shared between the two companies as both companies combine in the merger while in case of amalgamation, the market share of the market is completely taken by the acquirer company as the acquired company is completely out of the market due to amalgamation.

Employees Problem

In the case of both mergers as well as amalgamation, there can be duplication of many job roles but when it comes to amalgamation the bigger company has bigger stakes, and hence the employees of the acquired company are more likely to suffer as compared to the acquirer company when it comes to merger employees of both companies are likely to suffer as there will be job cuts due to duplication of many job roles or job description.

As one can see from the above while both strategies can offer benefits such as increased economies of scale, enhanced market power, and improved efficiency, they also come with potential risks and challenges, such as cultural clashes, integration difficulties, and regulatory hurdles and hence it is more important for companies considering a merger or an amalgamation to carefully weigh the pros and cons and then take any decision so as to ensure a successful outcome.

5 Features of Economies of Scale

Economies of scale is the term used in the context of economics. Economies of scale in simple words refer to the cost advantages that companies can have as they increase their production scale. When a company increases its production then it can spread its fixed costs such as overhead costs, rent, fixed salaries, insurance, and other such fixed costs across a larger number of units thus resulting in lower cost per unit, which can translate into higher profit margins for the company. Given below are some of the important features of economies of scale –

Characteristics of Economies of Scale

Increase in the Efficiency

The first and foremost feature of economies of scale is that it results in increased efficiency of the business of the company. Increased efficiency basically refers to the ability of the company to produce more output with the same or fewer resources. In the case of the economics of scale when the company increased production then since the fixed cost of the company is constant it will result in a lower cost per unit of production due to the distribution of fixed cost over a larger number of units and hence the company will be more efficient.

Decreasing Average Costs

The average cost is a mix of fixed cost and variable cost and when the company starts producing more units its variable cost will increase in proportion to the increased production but its fixed cost per unit will decrease due to the spreading of fixed cost over a large number of units and thus the average cost of per unit of production will decline. Hence for example, if suppose the company has a total fixed cost of $50000 and a variable cost per unit is $10 then if the company produces 1000 units then its total cost will be $60000 and the average cost will be $60 per unit but if the company increase its production to 2000 units than its total cost will be $70000 and the average cost per unit will come down to $35.

Technology Advancement

In the case of economies of scale, technology has a key role to play because with the advancement of technology companies find new and cheaper ways to produce goods resulting in increased efficiency and reduce costs, allowing the company to achieve economies of scale and gain a competitive advantage in the marketplace over its competitors operating in the same industry. In simple words when it comes to economies of scale technology acts like a booster dose as companies can save a lot of costs if it switches to new technology while manufacturing goods.

Acts as Barrier to Entry

Barriers to entry refer to factors that make it difficult for new firms or companies to enter a market and compete with established firms in the same industry. When established companies achieve economies of scale, they can produce their products at a lower cost per unit than new entrants. This gives established companies a cost advantage over new entrants thus making it difficult for new firms to compete with established companies.

Helps the Company in other Departments

Another important feature of the economics of scale is that it helps the company in other departments also, hence for example the money saved due to economics of scale can be used by the company towards research and development of new products or money saved due to economies of scale can be used towards marketing mix and so on. In simple words economies of scale provides a helping hand to other departments of the company which can create a lot of value in the long term as far as the company is concerned.

As one can see from the above that economies of scale have some unique characteristics and that is why companies all over the world strive to achieve economies of scale so that company stays ahead of their competitors and be successful in the long run.

Advantages and Disadvantages of Wholesale Buying

Wholesale buying is the term used in the context of marketing; it refers to purchasing a large number of goods from a supplier in one shot instead of buying small amounts over a long period of time. Wholesale buying is often done by businesses or companies so that they can get the products they need to sell to customers at a lower cost from the supplier of the good. However, wholesale buying can also be done by individuals who want to save money by purchasing the products they need at one time. In order to understand this concept in a better way one should look at some of the advantages and disadvantages of wholesale buying –

Advantages of Wholesale Buying

Saving of Costs and Improvement in Profit Margins

The first and foremost advantage of wholesale buying is that it helps the company in saving a lot of costs because when the company decides to purchase in bulk from one supplier then that supplier is willing to offer discounts to the company which otherwise is not possible if the company is not purchasing the goods in bulk. Hence in simple words, if the company has a clear idea about the requirement of raw materials in advance then the company easily buys in bulk and saves a lot of money which in turn will result in the company improving the profit margins.

Good Relationship with Suppliers

When the company buys the products in bulk from the supplier the relationship which the company develops with the supplier can be so helpful because When you have a good relationship with your supplier the company can build trust, respect, and open communication. This can lead to better deals and more favorable terms over time from the supplier to the company besides a good relationship with the supplier can also help the company to resolve any issues or problems that may arise more quickly and efficiently and hence saving a lot of time for the company.

Convenience

Imagine if your mobile phone had a charge of only 10 percent instead of 100 percent then you had to charge your mobile phone after every hour in the same way in the absence of wholesale buying company would have to give frequent orders hence in a way buying in bulk, businesses can avoid the hassle of frequent orders and restocking, leading to a more streamlined process for the company and hence it is more convenient as far as the company is concerned.

 

Disadvantages of Wholesale Buying

Large Upfront Payment

The biggest problem with wholesale buying is that it involves large upfront payment on the part of the company and hence it can be a challenge for some businesses or individuals who may not have the financial resources to make such a large investment. Hence in simple words, wholesale buying is not possible for small companies having limited capital thus limiting the use of wholesale buying for small companies.

Storage Problem

While it is easy to say that wholesale buying is good as it saves a lot of costs but when it comes to storing goods purchased in bulk it can be a big headache for companies that have limited storage facilities thus companies should consider this problem before thinking of doing wholesale buying.

Quality Issues

When the company purchases products in small lots then it can properly check the quality of the product but when a company buys products in wholesale then there is no scope of checking the quality of the product and the company is completely dependent on the supplier and if the supplier provides substandard product than it can lead to a big problem for the company as far as the goodwill of the company is concerned.

As one can see from the above that wholesale buying has pros as well as cons and that is the reason why any company thinking of doing wholesale buying should carefully read the above points and then only should take any decision whether it wants to do wholesale buying or not as far as the product requirement of the company is concerned.

7 Differences between Domestic and International Marketing

Domestic marketing and international marketing are the terms used in the context of marketing. Domestic marketing in simple words involves the marketing of goods and services within the boundaries of a country whereas international marketing in simple words refers to the marketing of goods and services to customers in several countries. In order to understand both concepts in a better way one should look at some of the differences between domestic and international marketing –

Domestic Marketing VS International Marketing

Scope of Marketing

Domestic marketing is only concerned with the domestic market, which means it concentrates on promoting goods and services for sale within the nation. The scope of international marketing, on the other hand, goes beyond the home market and operates beyond boundaries, emphasizing the sale of goods and services in several nations. Hence in a way international marketing involves identifying, comprehending, and addressing the cultural, economic, legal, and linguistic distinctions across diverse countries so as to ensure that international marketing is a success.

Market Knowledge

In the case of domestic marketing, the company should have knowledge related to local consumers, competition, regulations, distribution channels, and other factors that can have an influence on the domestic marketing strategy. On the other hand, international marketing requires an extensive understanding of cultural, economic, and legal systems in different countries. Hence in simple words when it comes to international marketing company needs to be more proactive and do extensive research as it involves many countries and hence it is a tedious task in the case of international marketing as compared to domestic marketing.

Target Market

The target market for domestic marketing is usually limited to the local market within the country. Hence all the marketing efforts as well as marketing strategy are focused on reaching and satisfying the needs of consumers within the domestic market. On the other hand, the target market for international marketing includes multiple countries with diverse cultures and languages. Hence all the marketing efforts as well as marketing strategies should be made in keeping in mind the needs and wants of consumers across the globe.

Competition

When it comes to competition domestic marketing has fewer competitors as companies have to compete domestically only, while as far as international marketing is concerned it has intense competition as the company has to compete with both domestic companies as well as foreign companies operating in various countries. In simple words, if you are a movie buff then you will understand this reference as international marketing is like an avenger level threat and hence requires more effort and resources from a company.

Language

In the case of domestic marketing, the company uses a single language because the target customer base is domestic consumers only while international marketing requires the use of multiple languages because international marketing targets customers of many countries and hence requires the use of different languages in order to devise a successful marketing strategy.

Transportation Costs

In the case of domestic marketing, the costs involved with transportation or logistics expenses are lower side as the company can make use of rail and road transport, while international marketing involves higher costs due to longer distances and companies have to use either sea transport or air transport in order to send goods from one country to another.

Currency and Foreign Exchange

In the case of domestic marketing, the company does not have to worry about either currency or foreign exchange because the company is dealing in single currency but when it comes to international marketing the company has to manage currency risk as well as exchange rate risk because in case of international marketing, many currencies are involved and hence in international marketing there are these two additional apart from other risks.

As one can see from the above that both domestic marketing and international marketing are miles apart from each other and that is the reason why any company thinking of doing either domestic marketing or international marketing should carefully read the above points and then only should take the decision whether the company wants to do domestic marketing or international marketing for company’s products.

 

Advantages and Disadvantages of Financial Analysis

The saying that one should not judge a book by its cover is frequently used to caution people against drawing conclusions about anything just from its outward look. In terms of financial analysis, the same idea holds true. It’s not always a good idea to invest in a business or company just because it appears excellent on paper. Financial analysis in simple words refers to that process by which one can evaluate the company’s financial performance and position using various techniques like analyzing financial statements, ratio analysis, forecasting, and trend analysis. Financial analysis is a powerful tool in the hands of investors, analysts as well as management through which they can not only analyze past performance but also can predict the future performance of the company. In order to get a better idea about this concept one should look at the advantages and disadvantages of financial analysis –

Advantages of Financial Analysis

Highlights Strong and Weak Points

The biggest advantage of financial analysis is that it helps an investor as well as financial analysts in understanding a company’s operations and performance by examining financial statements, ratios, and other financial data. This data can be used to pinpoint a company’s strong points like rapid revenue growth or high-profit margins as well as weak points like significant debt or poor cash flow which in turn can help an individual doing financial analysis in making an informed decision about the company.

Identification of Trends and Future Possibilities

Another benefit of financial analysis is that by analyzing financial statements, ratios, and other financial data over a period of time investors, as well as analysts, identify trends like seasonality trends of sales, cyclicality of business, and underlying trends in the industry which in turn can also be used to assess the future prospects about the growth of the industry as well as the company.

Relative Strength

Financial analysis can help the investors, as well as analysts, compare the company’s performance to that of its competitors or industry norms Investors and analysts can compare a company’s performance to that of other companies in the same industry by examining financial statements, ratios, and other financial data. This can offer insightful information about how a business is doing in comparison to its competitors and whether it is outperforming, underperforming, or operating in line with industry standards.

Disadvantages of Financial Analysis

Ignores Qualitative Factors

The biggest disadvantage of financial analysis is that it takes into account only quantitative factors like ratios, accounting, and financial data but it does not take into account qualitative factors like market trends, consumer behaviors, promoter vision, industry outlook, and so on. In simple words a company has two dimensions one is quantitative and the other is qualitative financial analysis does a great job of analyzing the quantitative part but completely ignores the qualitative part thus one can say that financial analysis does not reveal the complete picture.

Biased

Another limitation of financial analysis is that it can be biased in the sense that analysts doing financial analysis can present any version regarding the ratios which can be influenced by the personal biases of the analyst, leading to incorrect conclusions. Besides financial analysis makes many assumptions which again can lead to wrong conclusions.

Data Problem

Financial analysis is based on past data and predicting future trends based on past data may not yield the correct results every time as many other variables are involved when it comes to the future success of any company. Besides financial analysis heavily relies on accurate and up-to-date financial data, which may not always be available apart from the risk of data itself being manipulated.

As one can see from the above that financial analysis has pros as well as cons, financial analysis when done properly can provide valuable insights and can be of great help in decision-making, but it’s important to keep in mind the limitations from which financial analysis suffers. In the end, the results of a financial analysis should be just one piece of the puzzle in the bigger picture of a company’s financial health.

Features of Decision Tree Analysis

We all have seen trees, in the case of trees there is one tree but there are many branches of trees which go in different directions, in the case of machine learning and data mining similar tool is used which is called decision tree analysis. A decision tree analysis in simple words refers to that analysis where an individual can visually organize and make decisions by breaking down options based on specific conditions. Hence one can compare it with a flowchart just like a flowchart has different boxes where the selection of each box gives different outcomes. In order to get a better understating about this concept one should look at some of the important features of decision tree analysis –

Characteristics of Decision Tree Analysis

Easy to Understand

The first and foremost feature of decision tree analysis is that it is very easy to understand even for those people who do not have any technical background or expertise. As the saying goes a picture speaks a thousand words the same thing applies to decision tree analysis because if you give 10-page complex data to anyone then chances are he or she may not even bother to read all 10 pages but if you present the same set of data through flowchart than they will be intrigued and take interest in the decision tree.

Tree Structure

Another important feature of decision tree analysis is that the decision trees are organized into a tree-like structure, with a root node representing the initial decision or question, and branches representing the possible outcomes about the question or possible outcomes of the decision under consideration by the company.

Descriptive and Predictive Modelling

Decision tree analysis can be used to determine which factors are most crucial for describing the target variable as part of descriptive modelling, which entails identifying the relationships between various variables in the data. Decision tree analysis can also be used for Predictive modelling which involves using the information from the data to make predictions about new observations. Hence one can say that decision tree analysis can be used for current data as well as for predicting future variables based on current data

Handling Missing Values and Categorical Variables

Decision trees can handle missing values by creating branches that represent missing values as a separate category. Decision trees can also handle categorical variables by creating branches for each category of the variable.

Multiple Branches

Another important characteristic of decision tree analysis is that it can handle multiple outputs by creating multiple branches for each possible outcome which makes it easy for anyone to handle multiple problems at once. In simple words just like a Smartphone can perform multiple functions at once and solve a variety of problems like there is no need for wearing a watch, or keeping a torch or using the calculator on the Smartphone in the same way decision tree analysis can handle multiple problems and give multiple outputs.

Other Miscellaneous Features

Apart from the above features decision tree analysis has many other features such as the decision tree can handle imbalanced datasets, it can also handle high-dimensional data, it can handle non-linear interactions, can capture non-linear relationships between the variables, it can handle both categorical and numerical variables and so on.

As one can see from the above that decision tree analysis is a powerful and widely used tool in the field of data analysis and has many unique characteristics and that is the reason why any company thinking of using this method should carefully read the above points and then only should use it so as to take maximum advantage from this powerful tool as decision tree analysis can be used in various fields such as finance, healthcare, marketing, logistics, production and many more.

7 Differences between Branding and Advertising

Branding and advertising are the terms used in the context of marketing products as well as services. Branding and advertising are both important elements of marketing, but they have different goals, purpose, and focus when it comes to the overall marketing strategy of the company. In order to get a better idea about both concepts one should look at some of the differences between branding and advertising –

Branding Vs Advertising

Purpose

Branding is focused on creating and maintaining a unique identity and reputation for a company or product, while advertising is focused on promoting and selling that product or service. Hence in simple words, branding is often done for the whole company so that customers can have that image of the company when they see the products or services from the company while advertising is often done for individual products or services.

Long Term and Short Term

Branding is an ongoing process as the goal of branding is to create a long-lasting image of the company in the minds of the customers hence branding is often a long-term investment that will continue till the company is in existence, while advertising can be more short-term in nature and focused on specific campaigns and that is the reason why advertising campaigns have a specific start and end date.

Type of Customers

Branding is directed at both current and potential customers because if the company stops branding then current customers will think that the company has some problem and may go towards other brands as human beings have this tendency to associate themselves with strong brands while advertising is primarily directed at capturing new customers for company’s products.

Goals

The goal of branding is to create a strong and familiar identity for the company and establish a long-lasting relationship with consumers, while the goal of advertising is to increase awareness and interest in a specific product or service and hence increase the sales of an individual product or service. In simple words branding often focuses on creating an emotional connection with the consumer, while advertising focuses on individual products or services.

Channels of Marketing

Branding is a complete package in the sense that branding is present everywhere whether its the name of the company, the logo of the company, products packaging, business cards and so on while advertising is typically done through outside agencies on various channels of marketing like television advertising, digital advertising, radio advertising, newspaper and so on.

Levels of Management

In the case of branding, it is largely under the control of the top management of the company in the sense that all decisions related to the branding of the company are taken by the top management of the company, while advertising decisions are often delegated to middle-level management who in turn appoints outside agencies for advertising the products or services of the company.

Result Orientated

In the case of branding the results of a branding campaign are difficult to measure or asses because branding takes years and one cannot judge branding over a short period of time but when it comes to advertising the success or failure of advertising can be measured by metrics such as reach, frequency, and the response of the advertising.

As one can see from the above differences that branding and advertising are miles apart but when it comes to long-term marketing strategy of the company branding and advertising are both important aspects of marketing that work together to promote and sell a product or service. Hence one can say that both branding and advertising are interrelated because a strong brand creates a base for a company’s reputation and makes advertising of a company’s product more effective, while without advertising the brand will not be able to succeed.

7 Features of Rural Marketing

When we talk about marketing the emphasis is always on urban areas and metro cities but with the advent of technology and the growing income of rural areas rural marketing has gained tremendous importance. Rural marketing refers to the process of promoting and selling products and services to customers in rural areas. It involves identifying the specific needs and preferences of rural consumers and developing marketing strategies that effectively reach and appeal to them. In order to understand this concept one should look at some of the important features of rural marketing –

Rural Marketing Characteristics

Smaller target market

The first and foremost feature of rural marketing is that the target market of companies doing marketing in rural areas has a smaller population compared to urban areas, so the target market for rural marketing is smaller and hence companies cannot expect bigger numbers from rural areas which is the case with companies doing marketing in urban areas.

Low literacy rate

Rural areas often have lower literacy rates, implying that companies doing marketing in rural areas cannot use complex marketing strategies or language rather companies should strive to make marketing materials and messages simple and easy to understand which in turn will attract rural customers towards the products of the company.

Low Income

Another important characteristic of rural marketing is that the rural populations have lower income if one compares it with the urban population and hence the products which the company is offering to rural areas should be priced accordingly. Hence, for example, one cannot expect people in rural areas to purchase expensive mobiles from companies like Apple and Samsung rather people living in rural will prefer to buy low-cost mobiles.

Limited Infrastructure

In the case of rural marketing companies should remember that rural areas often have limited infrastructure, such as roads and transportation, which can make it difficult for companies to distribute their products to the consumers of rural areas hence marketing strategy of the company should keep this thing in mind.

Agriculture Economy

Rural areas are dependent on agriculture for their livelihood and any problem like drought or weather-related issues can adversely affect the people of rural areas which in turn will make the task of companies very difficult as people will not be able to buy products as their income is completely dependent on agriculture unlike people in urban areas who many sources of income.

Use of Traditional Mediums

In the case of rural marketing companies will have to use traditional mediums of communication such as word of mouth, community gatherings, and other such activities for promoting their products as not all people living in rural areas have access to televisions, the internet, and other media mediums thus companies should keep in mind this factor before deciding about the marketing strategy for rural areas.  Besides people in rural areas do not get impressed or influenced by fancy advertisements or promotions rather they require a personal touch, such as building relationships with local leaders and influencers.

Government Policies

Government policies and schemes have a big impact on how the company will be able to succeed in rural areas. Hence for example if the government is giving more subsidies, giving loan waivers to farmers, or giving other such soaps to farmers then it can give a boost to demand in rural areas and companies doing rural marketing should keep this aspect in mind because when there is high demand than even small marketing can give great results and vice versa.

As one can see from the above that rural marketing is a unique and challenging aspect of marketing that requires a different approach than urban marketing and that is the reason why any company thinking of doing rural marketing should carefully read the above characteristics and then only should take any decision regarding whether the company wants to go for rural marketing or not.