Monthly Archives: January, 2013

Cost Push Inflation

Cost push inflation or cost inflation is induced by the wage-inflation process. Cost-push inflation occurs when the price of inputs increases. Businesses must acquire raw materials, labour, energy, and capital to operate.

This is especially true for a Country like India, where labour intensive techniques are commonly used. Theories of cost-push inflation (also called sellers’ or mark-up inflation) came to be put forward after the mid-1950s.They appeared largely in refutation of the demand-pull theories of inflation and three important common ingredients of such theories are

  • That the upward push in costs is autonomous of the demand conditions in the concerned market
  • That the push forces operate through some important cost component such as wages, profits (mark up), or materials cost.

Accordingly, cost-push inflation can have  the forms of  wage-push inflation, profit-push inflation, material-cost push inflation, or inflation of a mixed variety in which several push factors reinforce each other and that  the increase in costs is passed on to buyers of  goods in the form of higher prices, and not absorbed  by producers. Thus, a rise in wages leads to a rise in the total cost of production and a consequent rise in the price level, because fundamentally, prices are based on costs. It has been said that a rise in wages causing arise in prices may, in turn, generate an inflationary spiral because an increase would motivate the workers to demand more wages.

Cost-push inflation can be diagrammatically explained as follows.

Cost Push

In the above figure, demand curve D represent the aggregate demand function and SS represents aggregate supply function. The full employment level of income is OY. At this F is the point of intersection between aggregate demand and aggregate supply function. When aggregate supply function shifts upward to S1 it will become a vertical straight line at point G at full employment level. The new equilibrium point A is determined at OY1 level of output, which is less than full employment level at P1 level of prices. This means that with a rise in the price level unemployment increases. A further shift in the aggregate supply curve to S2 due to further increase in wages lead to further increase in price to P2 and fall in income level to OY2


Demand Pull Inflatiion

Two Types of Inflation on the Basis of Cause of Origin: They are Demand Pull Inflation and Cost Push Inflation.


Demand Pull Inflation

The most common cause for inflation is the pressure of ever-rising demand on a stagnant or less rapidly increasing supply of goods and services. It occurs when spending on goods and services drives up prices. Demand-pull inflation is fuelled by income, so efforts to stop it involve reducing consumer’s income or giving consumers more incentive to save than to spend.

According to the demand-pull theory, prices rise in response to an excess of aggregate demand over existing supply of goods and services. It is also called excess-demand inflation. In the excess-demand theories of inflation, excess demand means aggregate real demand for output in excess of maximum feasible, or potential, or full employment, output (at the going price level).

The demand-pull theorists point out that inflation (demand-pull) might be caused, in the first place, by an increase in the quantity of money. Demand-pull or just demand inflation may be defined as a situation where the total monetary demand persistently exceeds total supply of real goods and services at current prices, so that prices are pulled upwards by the continuous upward shift of the aggregate demand function.

Demand-pull inflation can spread across borders as well. China and India’s economic growth not only puts pressure on prices in these countries but also on prices worldwide as the demand for imports increase.

If government spending is financed by printing currency or by the central bank monetizing the debt, demand-pull inflation can become hyperinflation.

By using the aggregate demand and aggregate supply curves, the demand-pull process can be shown diagrammatically as follows:

Deman Pull

In the above figure, the X-axis measures real output and Y-axis measures the price level. Aggregate demand curves are D,D1,and D2 whereas S curve represents Aggregate supply function , which slopes upward from left to right and at point F it becomes a vertical straight line. At this point the economy reaches at full employment level. Hence real output remains same or inelastic at this point. D curve intersect S curve at point F, where real output or income is at full employment and OP is the price level. When aggregate demand increases from D to D1 and D2, the real output or income will remain same but the price level tends to increase from OP to OP1 and further to OP2.

In short the inflationary process can be described as follows: Increasing demand increasing prices – increasing costs – increasing income – increasing demand – increasing prices – and so on.

Causes of Demand Pull Inflation

1. Increase in Public Expenditure

There may be an increase in the public expenditure (G) in excess of public revenue. This might have been made possible (or rendered necessary) through public borrowings from banks or through deficit financing, which implies an increase in the money supply.

2. Increase in Investment

There may be an increase in the autonomous investment (in firms, which is in excess of the current savings in the economy. Hence, the flow of total expenditure tends to rise, causing an excess monetary demand, leading to an upward pressure on prices.

3. Increase in MPC

There may be an increase in the marginal propensity to consume (MPC), causing an excess monetary demand. This could be due to the operation of demonstration effect and such other reasons.

4. Increasing Exports and Surplus Balance of Payments

In an open economy, an increasing surplus in the balance of payments also leads to an excess demand. Increasing exports also have an inflationary impact because there is generation of money income in the home economy due to export earnings but, simultaneously, there is reduction in the domestic supply of goods because products are exported. If an export surplus is not balanced by increased savings, or through taxation, domestic spending will be in excess of the value of domestic output, marketed at current prices.

5. Diversification of Goods

A diversion of resources from the consumption goods sector either to the capital good sector or the military sector (for producing war goods) will lead to an inflationary pressure because while the generation of income and expenditure continues, the current flow of real—output decreases on account of high gestation period involved in these sectors. Again, the opportunity cost of war goods is quite high in terms of consumption goods meant for the civilian sector. This leads to an excessive monetary demand for the goods and services against their real supply, causing the prices to move up.

In short, it is said that the demand-pull inflation could be averted through deflationary measures adopted by the monetary and fiscal authorities. Thus, passive policies are responsible for demand-pull inflation

Strategies for each stage of PLC

The major use of the product life cycle concept in strategic market planning is based on the notion that characteristics of each stage of the life cycle lend themselves to particular objectives and strategies. We examine this by tracing through each of the stages.


Introductory stage

At this stage, awareness of the new product is low, and competitors are few or non-existent. Considerable effort may have to be made to bring the product to the attention of distributors and consumers. Marketing efforts are likely to be focused on informing customers and promotional and distribution elements of the marketing mix will be targeted at innovator categories. Pricing strategies can be aimed either at ‘skimming’ the market through high initial prices that gradually reduce, or at ‘market penetration’, aiming to achieve high levels of market share quickly through low prices. Distribution will tend to be exclusive or selective, and advertising aimed at building awareness.


Very often in India, it is noticed that a product is advertised but is not available at the distribution outlets. This is a waste of promotional expenses. We must make optimum use of the available resources of the organization. Thus distribution should be arranged before the product is launched.


Growth stage

When the sales shoot up and we are satisfied with the profit generated by the product, competitors will now enter the market and perhaps offer new product features. Therefore, we may have to think of improving our product so that we do not reach the ultimate `decline’ stage too quickly


If the new product is successful, we can expect a rapid growth in sales. During this stage new competitors are expected to enter the market and marketing strategies will need to be focused on combating these new entrants. Although price wars are unlikely to develop at this early stage, considerable effort may be required to establish the intensive distribution required for ultimate mass market demand. Communications will be aimed at creating brand image. The promotional expenditure should maintained at the same level or is raised slightly in order to meet competition.


Maturity stage

This stage generally lasts longer than the other stages and poses problems for the management in maintaining the sales level. Actually, there is a slowdown in the growth rate of the sales in case of such matured products


Competition is at its peak. Market share needs defending, while at the same time preserving profit levels. Brand preferences and loyalties are likely to be already established by this stage, but there is likely to be considerable emphasis on trying to encourage brand switching through sales promotion. Price reductions feature here and distribution efforts are aimed at maintaining dealer relationships.


Decline stage

Sales promotion may be reduced to a minimum as the market shrinks. Price competition and price cutting are likely to be intense. Emphasis is likely to switch either to looking for ways to extend the product life cycle or to new products, with the old product being ‘milked’ for profits.

Elements to be considered for Assessment Center

The following are the essential elements for a process to be considered an assessment center

1. Job Analysis

A job analysis of relevant behaviors must be conducted to determine the dimensions, competencies, attributes, and job performance indices important to job success in order to identify what should be evaluated by the assessment center. The type and extent of the job analysis depend on the purpose of assessment, the complexity of the job, the adequacy and appropriateness of prior information about the job, and the similarity of the new job to jobs that have been studied previously. If past job analyses and research are used to select dimensions and exercises for a new job, evidence of the comparability or generalizability of the jobs must be provided. If job does not currently exist, analyses can be done of actual or projected tasks or roles that will comprise the new job, position, job level, or job family.

Target dimensions can also be identified from an analysis of the vision, values, strategies, or key objectives of the organization. Competency-modeling procedures may be used to determine the dimensions/competencies to be assessed by the assessment center, if such procedures are conducted with the same rigor as traditional job analysis methods. Rigor in this regard is defined as the involvement of subject matter experts who are knowledgeable about job requirements, the collection and quantitative evaluation of essential job elements, and the production of evidence of reliable results. Any job analysis or competency modeling must result in clearly specified categories of behavior that can be observed in assessment procedures.

A “competency” may or may not be amenable to behavioral assessment as defined herein. A competency, as used in various contemporary sources, refers to an organizational strength, an organizational goal, a valued objective, a construct, or a grouping of related behaviors or attributes. A competency may be considered a behavioral dimension for the purposes of assessment in an assessment center if:

  • It can be defined precisely
  • Expressed in terms of behaviors observable on the job or in a job family and in simulation exercises.
  • A competency also must be shown to be related to success in the target job or position or job family.

2. Behavioral Classification

Assessment center requires that Behaviors displayed by participants must be classified into meaningful and relevant categories such as dimensions, attributes, characteristics, aptitudes, qualities, skills, abilities, competencies, and knowledge.

3. Assessment Techniques

The techniques used in the assessment center must be designed to provide information for evaluating the dimensions previously determined by the job analysis. Assessment center developers should establish a link from behaviors to competencies to exercises/ assessment techniques. This linkage should be documented in a competency-by exercise/ assessment technique matrix.

4. Multiple Assessments

Multiple assessment techniques must be used. These can include tests, interviews, questionnaires, socio-metric devices, and simulations. The assessment techniques are developed or chosen to elicit a variety of behaviors and information relevant to the selected competencies/ dimensions. Self-assessment and 360 degree assessment data may be gathered as assessment information. The assessment techniques will be pretested to ensure that the techniques provide reliable, objective and relevant behavioral information. Pre-testing might entail trial administration with participants similar to assessment center candidates, thorough review by subject matter experts as to the accuracy and representativeness of behavioral sampling and/or evidence from the use of these techniques for similar jobs in similar organizations.

5. Simulations

The assessment techniques must include a sufficient number of job related simulations to allow opportunities to observe the candidate’s behavior related to each competency/ dimension being assessed. At least one—and usually several—job related simulations must be included in each assessment center. A simulation is an exercise or technique designed to elicit behaviors related to dimensions of performance on the job requiring the participants to respond behaviorally to situational stimuli. Examples of simulations include, but are not limited to, group exercises, in-basket exercises, interaction (interview) simulations, presentations, and fact-finding exercises. Stimuli may also be presented through video based or virtual simulations delivered via computer, video, the Internet, or an intranet. Assessment center designers also should be careful to design exercises that reliably elicit a large number of competency-related behaviors. In turn, this should provide assessors with sufficient opportunities to observe competency-related behavior.

6. Assessors

Multiple assessors must be used to observe and evaluate each assessee. When selecting a group of assessors, consider characteristics such as diversity of age, sex, organizational level, and functional work area. Computer technology may be used to assess in those situations in which it can be shown that a computer program evaluates behaviors at least as well as a human assessor. The ratio of assessees to assessors is a function of several variables, including the type of exercises used, the dimensions to be evaluated, the roles of the assessors, the type of integration carried out, the amount of assessor training, the experience of the assessors, and the purpose of the assessment center. A typical ratio of assessees to assessors is two to one. A participant’s current supervisor should not be involved in the assessment of a direct subordinate when the resulting data will be used for selection or promotional purposes.

7. Assessor Training

Assessors must receive thorough training and demonstrate performance that meets requirements prior to participating in an assessment center. The training should focus on processing of information, drawing conclusions, interview techniques and understanding behavior.

8. Recording Behavior

A systematic procedure must be used by assessors to record specific behavioral observations accurately at the time of observation. This procedure might include techniques such as handwritten notes, behavioral observation scales, or behavioral checklists. Audio and video recordings of behavior may be made and analyzed at a later date.

9. Reports

Assessors must prepare a report of the observations made during each exercise before the integration discussion. It is suggested that assessors must prepare the report immediately after the assessment is over otherwise they are likely to forget the details. Not only this, these reports must be independently made.

10. Data Integration

The integration of behaviors must be based on a pooling of information from assessors or through a statistical integration process validated in accordance with professionally accepted standards. During the integration discussion of each dimension, assessors should report information derived from the assessment techniques but should not report information irrelevant to the purpose of the assessment process. The integration of information may be accomplished by consensus or by some other method of arriving at a joint decision. Methods of combining assessors’ evaluations of information must be supported by the reliability of the assessors’ discussions. Computer technology may also be used to support the data integration process provided the conditions of this section are met.

Body Language

Body language is an important part of communication, which, according to at least one study, constitutes around 55% of what we are communicating. If you wish to communicate well, then it makes sense to understand how you can (and can’t) use your body to say what you mean. A significant cluster of body movements is used to signal aggression. This is actually quite useful as it is seldom a good idea to get into a fight, even for powerful people. Fighting can hurt you, even though you are pretty certain you will win. In addition, with adults, fighting is often socially unacceptable and aggression through words and body language is all that may ever happen.

1. Threat

Facial signals: Much aggression can be shown in the face, from disapproving frowns and pursed lips to sneers and full snarls. The eyes can be used to stare and hold the gaze for long period. They may also squint, preventing the other person seeing where you are looking.

Attack signals: When somebody is about to attack, they give visual signal such as clenching of fists ready to strike and lowering and spreading of the body for stability. They are also likely to give anger signs such as redness of the face.

Exposing oneself: Exposing oneself to attack is also a form of aggression. It is saying ‘Go on – I dare you. I will still win.’ It can include not looking at the other person, crotch displays, relaxing the body, turning away and so on.

2. Invasion

Invading the space of the other person in some way is an act of aggression that is equivalent to one country invading another.

False friendship: Invasion is often done under the cloak of familiarity, where you act as if you are being friendly and move into a space reserved for friends, but without being invited. This gives the other person a dilemma of whether to repel a ‘friendly’ advance or to accept dominance of the other.

Approach: When you go inside the comfort zone of others without permission, you are effectively invading their territory. The close you get, the greater your ability to have ‘first strike’, from which an opponent may not recover.

Touching: Touching the person is another form of invasion. Even touching social touch zones such as arm and back can be aggressive.

3. Gestures

Insulting gestures: There are many, many gestures that have the primary intent of insulting the other person and hence inciting them to anger and a perhaps unwise battle. Single and double fingers pointed up, arm thrusts; chin tilts and so on are used, although many of these do vary across cultures (which can make for hazardous accidental movements when you are overseas).

Mock attacks: Gestures may include symbolic action that mimics actual attacks, including waving fingers (the beating baton), shaking fists, and head-butts and so on. This is saying ‘Here is what I will do to you!’. Physical items may be used as substitutes, for example banging of tables and doors or throwing. Again, this is saying ‘This could be you!’

Sudden movements: All of these gestures may be done suddenly, signaling your level of aggression and testing the other person’s reactions.

Large gestures: The size of gestures may also be used to signal levels of aggression, from simple finger movements to whole arm sweeps, sometimes even with exaggerated movements of the entire body.

Submissive gestures: There are many gestures that have the primary intent of showing submission and that there is no intent to harm the other person. Hands out and palms up shows that no weapons are held and is a common pleading gesture. Other gestures and actions that indicate tension may indicate the state of fear. This includes hair tugging, face touching and jerky movement. There may also be signs such as whiteness of the face and sweating.

Small gestures: When the submissive person must move, then small gestures are often made. These may be slow to avoid alarming the other person, although tension may make them jerky.

4. Boredom

When a person is bored, they whole body is telling you. So if you are trying to persuade them, don’t bother (unless you are trying to bore them into submission).

Distraction: A bored person looks anywhere but at the person who is talking to them. They find other things to do, from doodling to talking with others to staring around the room. They may also keep looking at their watch or a wall clock.

Repetition: Bored people often repeat actions such as tapping toes, swinging feet or drumming fingers. The repetition may escalate as they try to signal their boredom.

Tiredness: A person who feels that they are unable to act to relieve their boredom may show signs of tiredness. They may yawn and their whole body may sag as they slouch down in their seat, lean against a wall or just sag where they are standing. Their face may also show a distinct lack of interest and appear blank.

Reasons for boredom

  • Disinterest: If the person is not interested in their surroundings or what is going on, then they may become bored. The disinterest may also be feigned if they do not want you to see that they are interested. Watch for leaking signs of readiness in these cases.
  • Readiness: A bored person may actually be ready for the actions you want, such as closing a sale. Sales people are known to keep on the sales patter long after the customer is ready to sign on the dotted line.

5. Deception

When a person is seeking to trick or deceive you, they there are many different body signals they may use. A deceptive body is concerned about being found out — and this concern may show.

Anxiety: A deceptive person is typically anxious that they might be found out (unless they are psychopathic or good at acting), so they may send signals of tension. This may include sweating, sudden movements, minor twitches of muscles (especially around the mouth and eyes), changes in voice tone and speed.Many of us have hidden anxiety signals. These signals are almost impossible to stop as we start them very young.

Control: In order to avoid being caught, there may be various signs of over-control. For example, there may be signs of attempted friendly body language, such as forced smiles (mouth smiles but eyes do not), jerky movements and clumsiness or oscillation between open body language and defensive body language.

Distracted: A person who is trying to deceive needs to think more about what they are doing, so they may drift off or pause as they think about what to say or hesitate during speech. They may also be distracted by the need to cover up. Thus their natural timing may go astray and they may over- or under-react to events. Anxiety may be displaced into actions such as fidgeting, moving around the place or paying attention to unusual places.

Reasons for deception

There can be many good reasons for deception.

  • Persuading: Deception may be an act that is intended to get another person to say or do something.
  • Avoiding detection: Deception also may be more self-oriented, where the sole goal is to get away with something, perhaps by avoiding answering incriminating questions.

6. Defending from attack

When a person is feeling threatened in some ways, they will take defensive body postures. The basic defensive body language has a primitive basis and assumes that the other person will physically attack, even when this is highly unlikely.

Covering vital organs and points of vulnerability: In physical defense, the defensive person will automatically tend to cover those parts of the body that could damage by an attack. The chin is held down, covering the neck. The groin is protected with knees together, crossed legs or covering with hands. The arms may be held across the chest or face.

Fending off: Arms may be held out to fend off attacker, possibly straight out or curved to deflect incoming attacks.

Becoming small: One way of defending against attack is to reduce the size of the target. People may thus huddle into a smaller position, keeping their arms and legs in.

Rigidity: Another primitive response is to tense up, making the muscles harder in order to withstand a physical attack. Rigidity also freezes the body, possibly avoiding movements being noticed or being interpreted as preparing for attack.

Seeking escape: Flicking the eyes from side to side shows that the person is looking for a way out.

Pre-empting attack

  • Giving in: Pre-empting the attack, the defensive person may reduce the, generally using submissive body language, avoiding looking at the other person, keeping the head down and possibly crouching into a lower body position.
  • Attacking first: Aggressive body language may also appear, as the person uses ‘attack as the best form of defense’. The body may thus be erect, thrust forward and with attacking movements. Where attack and defense both appear together, there may be conflicting signs appearing together. Thus the upper body may exhibit aggression whilst the legs are twisted together.

7. Emotions

With careful observation, emotions may be detected from non-verbal signs. Remember that these are indicators and not certain guarantees. Contextual clues may also be used; in particular what is being said to the person or what else is happening around then.

Anger: Anger occurs when achievement of goals are frustrated.

  • Neck and/or face is red or flushed.
  • Baring of teeth and snarling.
  • Clenched fists.
  • Leaning forward and invasion of body space.
  • Other aggressive body language.
  • Use of power body language.

Fear, anxiety and nervousness: Fear occurs when basic needs are threatened. There are many levels of fear, from mild anxiety to blind terror. The many bodily changes caused by fear make it easy to detect.

  • A ‘cold sweat’.
  • Pale face.
  • Dry mouth, which may be indicated by licking lips, drinking water, rubbing throat.
  • Not looking at the other person.
  • Damp eyes.
  • Trembling lip.
  • Varying speech tone.
  • Speech errors.
  • Voice tremors.
  • Visible high pulse (noticeable on the neck or movement of crossed leg.
  • Sweating.
  • Tension in muscles: clenched hands or arms, elbows drawn in to the side, jerky movements, legs wrapped around things.
  • Gasping and holding breath.
  • Fidgeting.
  • Defensive body language, including crossed arms and legs and generally drawing in of limbs.
  • Ready body language (for fight-or-flight)
  • Other symptoms of stress

Sadness: Sadness is the opposite of happiness and indicates a depressive state.

  • Drooping of the body.
  • Trembling lip.
  • Flat speech tone.
  • Tears.

Embarrassment: Embarrassment may be caused by guilt or transgression of values.

  • Neck and/ or face is red or flushed.
  • Looking down or away from others. Not looking them in the eye.
  • Grimacing, false smile, changing the topic or otherwise trying to cover up the embarrassment.

Surprise: Surprise occurs when things occur that were not expected.

  • Raised eyebrows.
  • Widening of eyes.
  • Open mouth.
  • Sudden backward movement.

Happiness: Happiness occurs when goals and needs are met.

  • General relaxation of muscles.
  • Smiling (including eyes).
  • Open body language

8. Relaxed body

A relaxed body generally lacks tension. Muscles are relaxed and loose. Movement is fluid and the person seems happy or unconcerned overall.

Torso: The torso may sag slightly to one side (but not be held there by irregular tension). It may also be well balanced, with the shoulders balanced above the pelvis. It does not curl up with fear, though it may curl up in a restful pose. Shoulders are not tensed up and generally hang loosely down.

Breathing: Breathing is steady and slower. This may make the voice a little lower than usual.

Color: The color of the skin is generally normal, being neither reddened by anger or embarrassment, nor pale with fear. There are no unusual patches, for example on the neck or cheeks.

Relaxed limbs: Relaxed limbs hang loosely. They do not twitch and seldom cross one another, unless as a position of comfort.

Arms: Tense arms are rigid and may be held close to the body. They may move in suddenly, a staccato manner. Relaxed arms either hang loosely or move smoothly. If arms cross one another, they hand loosely. Any crossing, of course can indicate some tension. Folding arms may just be comfortable.

Hands: When we are anxious, we often use our hands to touch ourselves, hold ourselves or otherwise show tension. Relaxed hands hang loose or are used to enhance what we are saying. They are generally open and may shape ideas in the air. Gestures are open and gentle, not sudden nor tense.

Legs: Legs when sitting may sit gently on the floor or may be casually flung out. They may move in time to music, with tapping toes. They may be crossed, but are not wound around one another. Note, that position of the legs can be a particular sign of hidden tension when the person is controlling the upper body and arms. When they are sitting at a table, what you see may be relaxed, but the legs may be held tense and wrapped.

Relaxed head: There are major signs of a relaxed person in their face.

Mouth: The person may smile gently or broadly without any signs of grimacing. Otherwise the mouth is relatively still. When talking, the mouth opens moderately, neither with small movements nor large movement. The voice sounds relaxed without unusually high pitch and without sudden changes in pitch or speed.

Eyes: The eyes smile with the mouth, particularly in the little creases at the side of the eyes. A relaxed gaze will look directly at another person without staring, and with little blinking. The eyes are generally dry. Eyebrows are stable or may move with speech. They do not frown.

Other areas: Other muscles in the face are generally relaxed. The forehead is a major indicator and lines only appear in gentle expression. The sides of the face are not drawn back. When the head moves, it is smoothly and in time with relaxed talk or other expression.

A significant cluster of body movements has to do with romance, signaling to a person of the opposite sex that you are interested in partnering with them.

From afar: From afar, the first task of body language is to signal interest (and then to watch for reciprocal body language).

Eyes: The eyes do much signaling. Initially and from a distance, a person may look at you for slightly longer than normal, then look away, then look back up at you, again for a longer period.

Preening: There are many preening gestures. What you are basically saying with this is ‘I am making myself look good for you’. This includes tossing of the head, brushing hair with hand, polishing spectacles and brushing or picking imaginary lint from clothes.

Self-caressing: Remote romantic language may also include caressing oneself, for example stroking arms, leg or face. This may either say ‘I would like to stroke you like this’ or ‘I would like you to stroke me like this’.

Leaning: Leaning your body towards another person says ‘I would like to be closer to you’. It also tests to see whether they lean towards you or away from you. It can start with the head with a simple tilt or may use the entire torso. This may be coupled with listening intently to what they say, again showing particular interest in them.

Pointing: A person who is interested in you may subtly point at you with a foot, knee, arm or head. It is effectively a signal that says ‘I would like to go in this direction’.

Other displays: Other forms of more distant display that are intended to attract include:

  • Sensual or dramatic dancing (too dramatic, and it can have the opposite effect).
  • Crotch display, where (particularly male) legs are held apart to show off genitalia.
  • Faked interest in others, to invoke envy or hurry a closer engagement.
  • Nodding gently, as if to say ‘Yes, I do like you.’

Up close: When you are close to the other person, the body language progressively gets more intimate until one-person signals ‘enough’.

Close in and personal: In moving closer to the other person, you move from social space into their personal body space, showing how you would like to get even closer to them, perhaps holding them and more…Standing square on to them also blocks anyone else from joining the conversation and signals to others to stay away.

Lovers’ gaze: When you are standing close to them, you will be holding each other’s gaze for longer and longer periods before looking away. You many also use what are called ‘doe eyes’ or ‘bedroom eyes’, which are often slightly moist and with the head inclined slightly down. A very subtle signal that few realize is that the eyes will dilate such that the dark pupils get much bigger (this is one reason why dark-eyed people can seem attractive).

Touching: Touching signals even closer intimacy. It may start with ‘accidental’ brushing, followed by touching of ‘safe’ parts of the body such as arms or back.

9. Body positions

The body in fearful stances is generally closed, and may also include additional aspects.

Making the body small: Hunching inwards reduces the size of the body, limiting the potential of being hit and protecting vital areas. In a natural setting, being small may also reduce the chance of being seen. Arms are held in. A crouching position may be taken, even slightly with knees slightly bent. This is approaching the curled-up regressive fetal position.

Motionlessness: By staying still, the chance of being seen is, in a natural setting, reduced (which is why many animals freeze when they are fearful). When exposed, it also reduces the chance of accidentally sending signals, which may be interpreted as being aggressive. It also signals submission in that you are ready to be struck and will not fight back.

Head down: Turning the chin and head down protects the vulnerable neck from attack. It also avoids looking the other person in the face (staring is a sign of aggression).

Eyes: Widening the eyes makes you look more like a baby and hence signals your vulnerability. Looking attentively at the other person shows that you are hanging on their every word.

Mouth: Submissive people smile more at dominant people, but they often smile with the mouth but not with the eyes.

Below diagram gives some of the gestures and the possible meaning of it

Body Language

Factors influencing consumer Behavior

Consumer purchasers are influenced by strongly by cultural, social, personal and psychological characteristics as shown below

Buying Behaviour

We can say that following factors can influence the Buying decision of the buyer:

a. Cultural

b. Social

c. Personal

d. Psychological

1.Cultural Factors

Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyer’s culture, subculture, and social class.

a. Culture

Culture is the most basic cause of a person’s wants and behavior. Human behavior is largely learned. Growing up in a society, a child learns basic values, perceptions, wants, and behaviors from the family and other important institutions. A person normally learns or is exposed to the following values: achievement and success, activity and involvement, efficiency and practicality, progress, material comfort, individualism, freedom, humanitarianism, youthfulness, and fitness and health.

Every group or society has a culture, and cultural influences on buying behavior may vary greatly from country to country. Failure to adjust to these differences can result in ineffective marketing or embarrassing mistakes. For example, business representatives of a U.S. community trying to market itself in Taiwan found this out the hard way. Seeking more foreign trade, they arrived in Taiwan bearing gifts of green baseball caps. It turned out that the trip was scheduled a month before Taiwan elections, and that green was the color of the political opposition party. Worse yet, the visitors learned after the fact that according to Taiwan culture, a man wears green to signify that his wife has been unfaithful. The head of the community delegation later noted, “I don’t know whatever happened to those green hats, but the trip gave us an understanding of the extreme   differences in our cultures.” International marketers must understand the culture in each international market and adapt their marketing strategies accordingly.

b. Subculture

Each culture contains smaller subcultures or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important market segments, and marketers often design products and marketing programs tailored to their needs. Here are examples of four such important subculture groups.

c. Social Class

Almost every society has some form of social class structure. Social Classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. In some social systems, members of different classes are reared for certain roles and cannot change their social positions. Marketers are interested in social class because people within a given social class tend to exhibit similar buying behavior. Social classes show distinct product and brand preferences in areas such as clothing, home furnishings, leisure activity, and automobiles.

2. Social Factors

A consumer’s behavior also is influenced by social factors, such as the consumer’s small groups, family, and social roles and status.

a. Groups

Many small groups influence a person’s behavior. Groups that have a direct influence and to which a person belongs are called membership groups. In contrast, reference groups serve as direct (faceto- face) or indirect points of comparison or reference in forming a person’s attitudes or behavior. Reference groups to which they do not belong often influence people. Marketers try to identify the reference groups of their target markets. Reference groups expose a person to new behaviors and lifestyles, influence the person’s attitudes and self-concept, and create pressures to conform that may affect the person’s product and brand choices.

The importance of group influence varies across products and brands. It tends to be strongest when the product is visible to others whom the buyer respects. Manufacturers of products and brands subjected to strong group influence must figure out how to reach opinion leaders—people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others.

Many marketers try to identify opinion leaders for their products and direct marketing efforts toward them. In other cases, advertisements can simulate opinion leadership, thereby reducing the need for consumers to seek advice from others.

The importance of group influence varies across products and brands. It tends to be strongest when the product is visible to others whom the buyer respects. Purchases of products that are bought and used privately are not much affected by group influences because neither the product nor the brand will be noticed by others.

b. Family

Family members can strongly influence buyer behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services.

Husband-wife involvement varies widely by product category and by stage in the buying process. Buying roles change with evolving consumer lifestyles.

Such changes suggest that marketers who’ve typically sold their products to only women or only men are now courting the opposite sex. For example, with research revealing that women now account for nearly half of all hardware store purchases, home improvement retailers such as Home

Depot and Builders Square have turned what once were intimidating warehouses into female friendly retail outlets. The new Builders Square II outlets feature decorator design centers at the front of the store. To attract more women, Builders Square runs ads targeting women in Home, House Beautiful, Woman’s Day, and Better Homes and Gardens. Home Depot even offers bridal registries.

Similarly, after research indicated that women now make up 34 percent of the luxury car market, Cadillac has started paying more attention to this important segment. Male car designers at Cadillac are going about their work with paper clips on their fingers to simulate what it feels like to operate buttons, knobs, and other interior features with longer fingernails. The Cadillac Catera features an air-conditioned glove box to preserve such items as lipstick and film. Under the hood, yellow markings highlight where fluid fills go.

Children may also have a strong influence on family buying decisions. For example, it ran ads to woo these “back-seat consumers” in Sports Illustrated for Kids, which attracts mostly 8- to 14- year-old boys. “We’re kidding ourselves when we think kids aren’t aware of brands,” says Venture’s brand manager, adding that even she was surprised at how often parents told her that kids played a tie-breaking role in deciding which car to buy. In the case of expensive products and services, husbands and wives often make joint decisions.

c. Roles and Status

A person belongs to many groups—family, clubs, organizations. The person’s position in each group can be defined in terms of both role and status. A role consists of the activities people are expected to perform according to the persons around them.

3. Personal Factors

A buyer’s decisions also are influenced by personal characteristics such as the buyer’s age and lifecycle stage, occupation, economic situation, lifestyle, and personality and self-concept.

a. Age and Life-Cycle Stage

People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle—the stages through which families might pass as they mature over time. Marketers often define their target markets in terms of life-cycle stage and develop appropriate products and marketing plans for each stage. Traditional family life-cycle stages include young singles and married couples with children.

b. Occupation

A person’s occupation affects the goods and services bought. Blue-collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. Marketers try to identify the occupational groups that have an above-average interest in their products and services.

A company can even specialize in making products needed by a given occupational group. Thus, computer software companies will design different products for brand managers, accountants, engineers, lawyers, and doctors.

c. Economic Situation

A person’s economic situation will affect product choice. Marketers of income-sensitive goods watch trends in personal income, savings, and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and reprice their products closely.

d. Lifestyle

People coming from the same subculture, social class, and occupation may have quite different lifestyles. Life style is a person’s pattern of living as expressed in his or her psychographics. It involves measuring consumers’ major AIO dimensions—activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products). Lifestyle captures something more than the person’s social class or personality. It profiles a person’s whole pattern of acting and interacting in the world.

Several research firms have developed lifestyle classifications. It divides consumers into eight groups based on two major dimensions: self-orientation and resources. Self-orientation groups include principle-oriented consumers who buy based on their views of the world; status-oriented buyers who base their purchases on the actions and opinions of others; and action-oriented buyers who are driven by their desire for activity, variety, and risk taking. Consumers within each orientation are further classified into those with abundant resources and those with minimal resources, depending on whether they have high or low levels of income, education, health, self-confidence, energy, and other factors. Consumers with either very high or very low levels of resources are classified without regard to their self-orientations (actualizers, strugglers). Actualizers are people with so   many resources that they can indulge in any or all self-orientations. In contrast, strugglers are people with too few resources to be included in any consumer orientation.

e. Personality and Self-Concept

Each person’s distinct personality influences his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness. Personality can be useful in analyzing consumer behavior for certain product or brand choices. For example, coffee marketers have discovered that heavy coffee drinkers tend to be high on sociability. Thus, to attract customers, Starbucks and other coffeehouses create environments in which people can relax and socialize over a cup of steaming coffee.

Many marketers use a concept related to personality—a person’s self-concept (also called self-image). The basic self-concept premise is that people’s possessions contribute to and reflect their identities; that is, “we are what we have.” Thus, in order to understand consumer behavior, the marketer must first understand the relationship between consumer self-concept and possessions. For example, the founder and chief executive of Barnes & Noble, the nation’s leading bookseller, notes

4. Psychological Factors

A person’s buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes.

a. Motivation

A person has many needs at any given time. Some are biological, arising from states of tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need for recognition, esteem, or belonging. Most of these needs will not be strong enough to motivate the person to act at a given point in time. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Psychologists have developed theories of human motivation. Two of the most popular—the theories of Sigmund Freud and Abraham Maslow—have quite different meanings for consumer analysis and marketing.

b. Maslow’s Theory of Motivation

Abraham Maslow sought to explain why people are driven by particular needs at particular times. Why does one person spend much time and energy on personal safety and another on gaining the esteem of others? Maslow’s answer is that human needs are arranged in a hierarchy, from the most pressing to the least pressing. Maslow’s hierarchy of needs is shown in Figure. In order of importance, they are physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. A person tries to satisfy the most important need first. When that need is satisfied, it will stop being a motivator and the person will then try to satisfy the next most important need. For example, starving people (physiological need) will not take an interest in the latest happenings in the art world (self-actualization needs), nor in how they are seen or esteemed by others (social or esteem needs), nor even in whether they are breathing clean air (safety needs). But as each important need is satisfied, the next most important need will come into play.

c. Perception

A motivated person is ready to act. How the person acts is influenced by his or her own perception of the situation. All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, and taste. However, each of us receives, organizes, and interprets this sensory information in an individual way. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world.

People can form different perceptions of the same stimulus because of three perceptual processes: selective attention, selective distortion, and selective retention. People are exposed to a great amount of stimuli every day. For example, the average person may be exposed to more than 1,500 ads in a single day. It is impossible for a person to pay attention to all these stimuli. Selective attention—the tendency for people to screen out most of the information to which they are exposed—means that marketers have to work especially hard to attract the consumer’s attention.

Even noted stimuli do not always come across in the intended way. Each person fits incoming information into an existing mind-set. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective distortion means that marketers must try to understand the mind-sets of consumers and how these will affect interpretations of advertising and sales information.

d. Learning

When people act, they learn. Learning describes changes in an individual’s behavior arising from experience. Learning theorists say that most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement.

e. Beliefs and Attitudes

Through doing and learning, people acquire beliefs and attitudes. These, in turn, influence their buying behavior. A belief is a descriptive thought that a person has about something. Buying behavior differs greatly for a tube of toothpaste, a tennis racket, an expensive camera, and a new car. More complex decisions usually involve more buying participants and more buyer deliberation. Figure shows types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands.

Importance of Motivation

Motivation is a very important for an organization because of the following benefits it provides:

1. Puts human resources into action

Every concern requires physical, financial and human resources to accomplish the goals. It is through motivation that the human resources can be utilized by making full use of it. This can be done by building willingness in employees to work. This will help the enterprise in securing best possible utilization of resources.

2. Low Employee Turnover and Absenteeism

When the employees are not satisfied with their job then they will leave it whenever they get an alternative offer. The dissatisfaction among employees also increases absenteeism. The employment training of new employees costs dearly to the organization. When the employees are satisfied with their jobs and they are well motivated by offering them financial and non-financial incentives then they will not leave the job. The rate of absenteeism will also be low because they will try to increase their output.

3. Improves level of efficiency of employees

The level of a subordinate or a employee does not only depend upon his qualifications and abilities. For getting best of his work performance, the gap between ability and willingness has to be filled which helps in improving the level of performance of subordinates. This will result into-

  • Increase in productivity,
  • Reducing cost of operations, and
  • Improving overall efficiency.

4. Leads to achievement of organizational goals

The goals of an enterprise can be achieved only when the following factors take place :-

  • There is best possible utilization of resources,
  • There is a co-operative work environment,
  • The employees are goal-directed and they act in a purposive manner,
  • Goals can be achieved if co-ordination and co-operation takes place simultaneously which can be effectively done through motivation.

5. High Performance

Motivated employees will put maximum efforts for achieving organizational goals. The untapped reservoirs, physical and mental abilities are tapped to the maximum. Better performance will also result in higher productivity. The cost of production can also be brought down if productivity is raised. The employees should be offered more incentives for increasing their performance. Motivation will act as a stimulant for improving the performance of employees.

6. Builds friendly relationship

Motivation is an important factor which brings employees satisfaction. This can be done by keeping into mind and framing an incentive plan for the benefit of the employees. This could initiate the following things:

  • Monetary and non-monetary incentives,
  • Promotion opportunities for employees,
  • Disincentives for inefficient employees.
  • In order to build a cordial, friendly atmosphere in a concern, the above steps should be taken by a manager. This would help in:
  • Effective co-operation which brings stability,
  • Industrial dispute and unrest in employees will reduce,
  • The employees will be adaptable to the changes and there will be no resistance to the change,
  • This will help in providing a smooth and sound concern in which individual interests will coincide with the organizational interests,
  • This will result in profit maximization through increased productivity.

7. Leads to stability of work force

Stability of workforce is very important from the point of view of reputation and goodwill of a concern. The employees can remain loyal to the enterprise only when they have a feeling of participation in the management. The skills and efficiency of employees will always be of advantage to employees as well as employees. This will lead to a good public image in the market which will attract competent and qualified people into a concern. As it is said, “Old is gold” which suffices with the role of motivation here, the older the people, more the experience and their adjustment into a concern which can be of benefit to the enterprise.

From the above discussion, we can say that motivation is an internal feeling which can be understood only by manager since he is in close contact with the employees. Needs, wants and desires are inter-related and they are the driving force to act. These needs can be understood by the manager and he can frame motivation plans accordingly. We can say that motivation therefore is a continuous process since motivation process is based on needs which are unlimited. The process has to be continued throughout.

We can summarize by saying that motivation is important both to an individual and a business. Motivation is important to an individual as:

  1. Motivation will help him achieve his personal goals.
  2. If an individual is motivated, he will have job satisfaction.
  3. Motivation will help in self-development of individual.
  4. An individual would always gain by working with a dynamic team.

Similarly, motivation is important to a business as:

  1. The more motivated the employees are, the more empowered the team is.
  2. The more is the team work and individual employee contribution, more profitable and successful is the business.
  3. During period of amendments, there will be more adaptability and creativity.
  4. Motivation will lead to an optimistic and challenging attitude at work place.

Evolution of HRM

Prior to 1900 when Human Resource Management as a specialized function did not exist all hiring, training and salary decisions were taken by individual managers/supervisors. If employees were not satisfied with the conditions they used to form unions and go on a strike to have their demands met.

As organizations started to grow and expand many managerial functions like production, marketing and personnel began to expand and came under the purview of specialists. The growth of organizations also led to the establishment of the first personnel departments about 1910. Work by individuals such as Frank and Lillian Gilbreth dealt with task design and efficiency.

HRM practices emerged during the industrial revolution in the 18th century when factories employed a large number of people to operate machines. Recruitment, payment and training became specialized activities, which required specialized people to do them for the organizations.

Since then, the HRM function has evolved both in its functions, roles and even in terminologies. For example:

  • Personnel administration
  • Manpower management
  • Personnel management
  • Human resource management
  • Strategic human resource management

This change in terminologies is a reflection of the paradigm shifts in business life.

A paradigm refers to a particular way of thinking about, seeing and doing things

Human resource gained more attention as the workforce considered to be an important resource to gain competitive advantage of organization and also it helpful in utilizing the resources of an organization to a optimum extent in order to achieve organizational goal.

Change in roles in HR

HR Functions

Entrepreneurial Functions

An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. He performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. He is thus a nucleus of high growth of the enterprise.

An entrepreneur is said to perform the following functions

1. Assumption of risk

Risk bearing or uncertainty bearing is the most important function of an entrepreneur which he tries to reduce by his initiative, skill and good judgment.

The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modern techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.

Risk bearing or uncertainty bearing still remains the most important function of an entrepreneur which he tries to minimize by his initiative, skill and good judgment.

2. Business decisions

The most vital function an entrepreneur discharges refers to decision making in various fields of the business enterprise. He is the decision maker of all activities of the enterprise.

  1. The entrepreneur has to decide
  2. To enter the industry this offers him the best prospects
  3. To produce goods that he thinks will pay him the most
  4. To employ those methods of production which seem to him the most profitable.
  5. To effect suitable changes in the size of the business, its location that are needed for the development of his business.

3. Managerial Functions

The entrepreneur performs the managerial functions such as

  1. Formulating production plans
  2. Overseeing finances
  3. Dealing with the purchases of raw materials
  4. Providing production facilities
  5. Organizing sales

In large establishments these management functions are delegated to professional managers an entrepreneur performs many useful functions such as

  1. Undertakes a venture
  2. Assumes risk and
  3. Earns profits
  4. Identifies opportunities to start business either as a manufacturer or a distributor

The entrepreneurship exists in every field of economic endeavor. Entrepreneurship has also been developed in the trading sector. A manufacturing entrepreneur demonstrates his entrepreneurial talents by bringing out new products while a trading entrepreneur performs his entrepreneurial functions in creating demand for the business he deals.

 Entreprenurship Function

The success and the quality of the output of the performance of the entrepreneur depends on how well he performs these functions. Therefore these functions performed describe the intensity of the relationship of the entrepreneur with the enterprise. For this reason, we can say that the relationship between the entrepreneur and entrepreneurship can be described as that between the body and the soul.

Inflation On Basis causes


Types of inflation on the basis of different causes:-


Deficit Inflation

Deficit inflation takes place due to deficit financing.


Credit Inflation

Credit inflation takes place due to excessive bank credit or money supply in the economy.


Scarcity Inflation

Scarcity inflation occurs due to hoarding. Hoarding is an excess accumulation of basic commodities by unscrupulous traders and black marketers. It is practised to create an artificial shortage of essential goods like food grains, kerosene, etc. with an intension to sell them only at higher prices to make huge profits during scarcity inflation. Though hoarding is an unfair trade practice and a punishable criminal offence still some crooked merchants often get themselves engaged in it.


Profit Inflation

When entrepreneurs are interested in boosting their profit margins, prices rise.


Pricing Power Inflation

It is often referred as Administered Price inflation. It occurs when industries and business houses increase the price of their goods and services with an objective to boost their profit margins. It does not occur during a financial crisis and economic depression, and is not seen when there is a downturn in the economy. As Oligopolies have the ability to set prices of their goods and services it is also called as Oligopolistic Inflation.


Tax Inflation

Due to rise in indirect taxes, sellers charge high price to the consumers.


Wage Inflation

If the rise in wages in not accompanied by a rise in output, prices rise.


Build-In Inflation

Vicious cycle of Build-in inflation is induced by adaptive expectations of workers or employees who try to keep their wages or salaries high in anticipation of inflation. Employers and Organisations raise the prices of their respective goods and services in anticipation of the workers or employees’ demands. This overall builds a vicious cycle of rising wages followed by an increase in general prices of commodities. This cycle, if continues, keeps on accumulating inflation at each round turn and thereby results into what is called as Build-in inflation.


Development Inflation

During the process of development of economy, incomes increases, causing an increase in demand and rise in prices.


Fiscal Inflation

It occurs due to excess government expenditure or spending when there is a budget deficit.


Population Inflation

Prices rise due to a rapid increase in population.


Foreign Trade Induced Inflation

It is divided into two categories, viz., (a) Export-Boom Inflation, and (b) Import Price-Hike Inflation.


Export-Boom Inflation

Considerable increase in exports may cause a shortage at home (within exporting country) and results in price rise (within exporting country). This is known as Export-Boom Inflation.


Import Price-Hike Inflation

If a country imports goods from a foreign country, and the prices of imported goods increases due to inflation abroad, then the prices of domestic products using imported goods also rises. This is known as Import Price-Hike Inflation. For e.g. India imports oil from Iran at $100 per barrel. Oil prices in the international market suddenly increases to $150 per barrel. Now India to continue its oil imports from Iran has to pay $50 more per barrel to get the same amount of crude oil. When the imported expensive oil reaches India, the indian consumers also have to pay more and bear the economic burden. Manufacturing and transportation costs also increase due to hike in oil prices. This, consequently, results in a rise in the prices of domestic goods being manufactured and transported. It is the end-consumer in India, who finally pays and experiences the ultimate pinch of Import Price-Hike Inflation. If the oil prices in the international market fall down then the import price-hike inflation also slows down, and vice-versa.


Sectoral Inflation

It occurs when there is a rise in the prices of goods and services produced by certain sector of the industries. For instance, if prices of crude oil increases then it will also affect all other sectors (like aviation, road transportation, etc.) which are directly related to the oil industry. For e.g. If oil prices are hiked, air ticket fares and road transportation cost will increase.