You are reading the article Inflation: Meaning, Types, Formula, Examples, Causes updated in November 2023 on the website Moimoishop.com. We hope that the information we have shared is helpful to you. If you find the content interesting and meaningful, please share it with your friends and continue to follow and support us for the latest updates. Suggested December 2023 Inflation: Meaning, Types, Formula, Examples, Causes
What is Inflation?Inflation is an economic concept that represents an increase in the prices of goods over time, reducing purchasing power and affecting individuals, businesses, and governments.
For instance, a cup of coffee costs $2.00 in 2023, but in 2023, it costs $2.50. This increase in the price of coffee is an example of inflation because the same amount of money ($2.00) can now buy less coffee than before.
Start Your Free Investment Banking Course
Download Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others
Factors such as increased demand, reduced supply, or government policies cause inflation. Inflations can have significant economic impacts, such as reducing the purchasing power of consumers, increasing the cost of borrowing, and affecting business investment decisions.
Key Highlights
Inflation is an economic concept that affects everyone, from individual consumers to businesses and governments.
Economists use metrics like the Consumer Price Index (CPI) or the Producer Price Index (PPI), which track the prices of goods and services at different production levels to measure it.
Strategies for managing it include monetary policy tools like adjusting interest rates and government policies to increase the supply of goods and services.
Over time, it can erode the value of savings and investments, emphasizing the importance of managing inflation to ensure long-term economic stability.
How Does Inflation Work?Step #1 Increase in the supply of money:
When the central bank increases the supply of money in an economy by printing more money or lowering interest rates, it increases the amount of money circulating in the economy.
Example: Let’s say a country’s central bank decides to print more money, and the total money supply increases from $1 trillion to $1.5 trillion.
With more money in circulation, consumers have more money to spend, leading to increased demand for goods and services.
Example: With more money in circulation, people may start buying more cars, electronics, and other goods, leading to increased demand for these products.
Step #3 Reduced supply of goods and services:
Example: Car manufacturing companies may not be able to produce enough cars to meet the increased demand, leading to a shortage of cars.
Step #4 Price increase:
With the demand for goods and services increasing and the supply decreasing, the prices of these goods and services begin to rise.
Example: The shortage of cars may lead to an increase in car prices, making it more expensive for people to buy cars.
Step #5 Reduced purchasing power:
As the prices of goods and services increase, the value of money decreases, leading to reduced purchasing power.
Example: With the increase in car prices, people may have to spend more money to buy the same car they could have bought at a lower price before. This means that the same amount of money can now buy fewer goods and services than before.
Types of Inflation Demand-pull InflationIt occurs when consumers want to buy more than businesses can produce and supply, increasing the product prices. For instance, if the tomato harvest falls by 50% over a given period, the demand will be more than the supply, which increases the crop price.
Cost-push InflationIt results from an increase in daily wages and production costs. For instance, if the production cost of cooking oil increases, food prices in restaurants will automatically rise.
Built-in InflationIt is when employees and laborers expect an increase in wages as a result of the increasing cost of living.
What Causes Inflation?Decrease in Supply: With the rise in prices of raw materials, the production volume declines, decreasing the supply altogether. When supply becomes less than the demand, the prices automatically increase.
International Factors: A significant part of a country’s economy depends on its import and export relations. When the import rate increases, the price of all imported goods increases in the domestic market.
Effects on the EconomyReduced Purchasing Power: Inflation makes money worth less, so people can buy fewer things with the same amount of money.
Hardship for the Poor: It hurts poor people the most because they spend most of their income on things like food and energy. The cost of essential goods has risen more than wages over the last seven years.
Increased Interest Rates: When inflation gets too high, central banks often raise interest rates. It makes borrowing money expensive, and people tend to spend less.
Boost in Employment and Growth: In the short term, it can actually help the economy grow faster. It can lower labor costs and encourage job growth.
Risk of Recession: If inflation keeps rising, people may expect higher wages, leading to even higher prices. It could create a cycle of inflation that eventually causes a recession.
How to Measure Inflation?There are several ways to measure inflation, including:
Consumer Price Index (CPI):
It tracks the changes in the prices of goods and services that households usually buy.
It includes things like food, housing, clothing, transportation, and healthcare.
CPI is published regularly by government agencies and is often used to adjust wages, benefits, and taxes.
Producer Price Index (PPI):
It measures the average price change that producers receive for their goods and services.
It tracks changes in wholesale prices and can indicate changes in consumer prices at an early stage.
GDP Deflator:
It compares the nominal GDP (total value of all goods and services produced in an economy at current prices) to the real GDP (adjusted for inflations).
It takes into account changes in both consumer and producer prices and is frequently used to compare inflations across countries.
Inflation Rate FormulaThe formula is,
Inflation Rate = (CPI (x+1) – CPIx) / CPI x,
Where
CPI x is the CPI rate value for the first year.
CPI x + 1 is the CPI value for the second/next year.
You can download this Inflation Rate Example Template here – Inflation Rate Example Template
#1 US
The CPI Index for the US in 2023 was 278.802. It rose to 296.797 in 2023. Calculate the inflation rate.
Given,
Solution:
The inflation rate for the US is 6.45%. It indicates that the prices of goods/services in the US economy increased by 6.45% in a year.
#2 UK
The consumer price index was 123.8 as of 2023. The recent value in December 2023 was 127.164. Calculate the inflation rate.
Given,
Solution:
The UK’s inflation rate is at 2.72%. It signifies that the increase in prices of products over a year has been over 2.72%.
Inflation vs. DeflationInflation Deflation
Definition It is a continuous increase in products (goods and services) over time. It is a constant decrease in the prices of goods and services over a period.
Causes Increase in money supply, increased demand, decrease in supply, or government policies Decrease in money supply, decreased demand, or economic recession
Examples Hyperinflation in Germany during the 1920s, inflation in the US during the 1970s The Great Depression in the US during the 1930s, the deflationary spiral in Japan during the 1990s
Impact on prices It increases the prices of goods and services It decreases the prices of goods and services
Impact on investments It tends to increase the value of assets such as stocks, real estate, and commodities It tends to decrease the value of assets such as stocks, real estate, and commodities
Impact on borrowing It increases the cost of borrowing money due to higher interest rates It decreases the cost of borrowing money due to lower interest rates
Impact on employment It can lead to job creation in the short run but may also cause a wage-price spiral and lead to unemployment in the long run It can lead to job losses due to decreased demand and economic slowdown
Frequently Asked Questions (FAQs)How does the government control inflation?
Governments can control inflation by using monetary policy tools such as increasing interest rates, reducing the money supply, and selling government securities. It can also use fiscal policy tools such as reducing government spending and increasing taxes.
Is inflation good or bad for the economy?
Inflation affects the economy in both good and bad ways. A certain level of inflation is beneficial as it encourages spending and investment. But high or unpredictable inflation can reduce consumer purchasing power, lower economic growth, and cause financial instability. So, the government and central banks must manage inflation carefully to promote stable and sustainable economic growth.
Q3. What is an example of inflation?
Suppose the inflation rate in a country was 6% per year. Here’s how much a loaf of bread would cost:
First year: $1.00
Second year: $1.06 (an increase of 6%)
Third year: $1.12 (another increase of 6%)
Real example: In 2023, the COVID-19 pandemic caused a surge in demand for homes in suburban areas, which led to an increase in the prices of houses and rental properties. This is an example of demand-pull inflation.
How to reduce inflation?
The most important measures to reduce inflation are:
Monetary measures: credit control, demonetization, and issuance of new currency
Fiscal measures: reducing expenses, increasing taxes, promoting savings, and managing public debt.
Other measures: increasing production, implementing wage policy reforms and establishing price control mechanisms.
Recommended ArticlesThis is an EDUCBA guide to Inflation. You can learn more from EDUCBA’s recommended articles.
You're reading Inflation: Meaning, Types, Formula, Examples, Causes
Meaning, Strategy, Examples & Types
What is Value-Based Pricing?
Value-based pricing is a pricing strategy that sets the price of a product/service based on the perceived value it provides to the customer rather than on its production cost or market competition.
By charging a price that reflects the value that the customer receives, a company can differentiate itself from competitors. Thus, it can potentially command a premium price for its products or services, leading to higher profit margins and customer loyalty.
Start Your Free Investment Banking Course
Download Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others
For example, the diamond industry rests entirely on perception. Even though they are one of the most common gems in the world, their price makes them seem rare and valuable. Here, the diamond industry has created an illusion of the stones’ preciousness. Hence, customers are willing to pay more, allowing the retailers to charge hefty margins.
Key Highlights
Value-based pricing is a pricing strategy where the basis of the price determination of the product is the value it delivers to the customer.
It focuses on the value a product provides to the customer rather than its production costs.
Companies determine the price of their product based on how much customers are willing to pay, which can result in higher profit margins.
It requires a deep understanding of the target customer, their willingness to pay for the product, and the competitive landscape.
It can help companies create a strong brand image and differentiate themselves from competitors.
However, it can be challenging to implement, and businesses must carefully evaluate its suitability for their product and market before implementing it.
How does Value-Based Pricing Strategy Work?To deploy this strategy, a company should consider the following factors:-
Focus on the Customer Segment
A critical aspect of this strategy is targeting a particular segment of customers.
For example, Brand A has come up with a 700 liters refrigerator, which is one of a kind of refrigerator available in the market. Now Brand A’s target segment is big-capacity refrigerator buyers and not all buyers. A person can call it segmentation of the target audience for setting up this strategy.
Comparison with the Next Best Alternative
It involves evaluating the product’s value proposition relative to its closest substitute or competitor in the market.
For example, Brand B may compare the quality of materials, craftsmanship, and unique features of its watch to those of its closest competitors to ensure that its pricing reflects the added value it provides.
This comparison helps to justify the premium price of the watch and ensures that customers are willing to pay more for its benefits compared to other high-end watches in the market.
Differentiation
When the company has a reference, it is essential to understand the difference between its product and its competitor’s product.
The company needs to identify differentiated features and assign them a dollar value to create perceived value.
For example, suppose the competitor’s 600-liter refrigerator has a price tag of $799. In that case, the company can add $100 to the competitor’s price by offering a 700-liter capacity refrigerator at $899 because it provides 100 liters of extra capacity compared to its competitor.
A survey of the targeted segment of customers is an essential part of this strategy.
Based on this strategy, customer feedback on price is necessary before launching a product and should continue even after launch.
A continuous survey will help the company price the product better as a game of perception that can quickly change.
Value-Based Pricing Examples #1 Luxury HandbagsLuxury brands such as Louis Vuitton, Chanel, and Hermes offer products that are not just well-made and high-quality but also carry a premium brand image and exclusivity. These brands understand the perceived value that their customers place on the brand, quality, and image, and they set their prices based on that value.
While the production cost of a Louis Vuitton handbag, for example, might not be significantly higher than that of a less expensive handbag from a different brand, Louis Vuitton can charge a much higher price because of the perceived value that its customers place on the brand.
#2 Software Industry #3 Healthcare IndustryPrimarily, in the healthcare industry, manufacturers set the prices for medicines on factors like hospital reimbursement, production volume, and more. Thus, the prices were extremely high. However, recently the Centers for Medicare and Medicaid Services (CMS) announced that the prices for prescription drugs will be as per the value they provide to the patients.
How to Calculate Value-Based Pricing?Setting pricing based on value is not a fixed formula but a flexible one that requires ongoing market research, customer feedback, and an assessment of market conditions. Instead of just using the cost of production to set prices, this pricing system tries to determine how much a product or service is worth to customers.
Step #1 Determine the Customer’s Perception of Value
It involves understanding the customer’s needs, preferences, and expectations for the product or service, as well as the benefits that the product or service provides.
Step #2 Evaluate the Competition
Knowing the prices and value propositions of competing products or services can give you essential information about what the market will bear and how customers value similar products or services.
Step #3 Set the Price Range
Using the information you got in steps 1 and 2, set a price range that accurately shows how much the customer thinks the product or service is worth.
Step #4 Set the Final Price
One should set the final price within the price range determined in step 3, considering factors such as the company’s cost structure, profitability goals, and market conditions.
Examples #1 Coffee MachineA company sells a high-end coffee machine that can brew coffee in multiple ways, including espresso, cappuccino, and latte. Determine the price that the company can charge.
Solution:
#1 Determine the machines value for the customers that drink coffee
Customers value the ability to brew high-quality coffee at home with various brewing options.
#2 Evaluate other brands manufacturing a similar product
Coffee machines from brands like yours cost between $500 and $1000.
#3 Decide the price range for the coffee machine
Based on how the customer sees the value and how much competition there is, the company decides that their coffee machine should cost between $600 and $900.
#4 Select the final price for the coffee machine as per the value
The company sets the final price at $850, considering its cost structure, profitability goals, and market conditions.
#2 Yoga ClassesSolution:
#1 Determine the perception of the value of the classes for the yoga students
Customers value personalized instruction, private studios, and high-end equipment and are willing to pay a premium for a premium experience.
#2 Evaluate competitor yoga classes by other trainers
Competitors offer similar premium yoga classes for $100 to $150 per session.
#3 Determine the yoga course’s price range
The company sets a price range of $120 to $140 per session based on how the customer sees the value and how much competition there is.
#4 Set the final price for the yoga class
The company sets the final price at $135 per session, considering its cost structure, profitability goals, and market conditions.
Types of Value-Based PricingParticulars Good Value Pricing Value-based Pricing
Definitions Good value pricing refers to a pricing strategy that offers customers a reasonable and justifiable price, considering the benefits the product provides.
Value-based pricing refers to pricing a product based on the perceived value of its additional features to a customer.
Purpose It aims to offer customers a product that delivers the expected benefits at a reasonable price, resulting in a good value proposition. The purpose of this pricing system is to set a product’s price based on the value it provides to the customer, which can lead to increased profits and customer satisfaction.
Examples A restaurant’s lunch combo of a sandwich, fries, and a drink costs $10, which is fair and reasonable given the quality and amount of the food. It’s a good deal for customers.
Difference Between Value-Based Vs. Cost-Based PricingValue-Based Pricing Cost Based Pricing
Value-based pricing sets prices based on customers’ perceived value of the product or service. Cost-Based Pricing is a pricing strategy that sets prices based on the cost of producing and delivering the product or service.
It emphasizes the customer’s perspective and willingness to pay. Emphasizes the company’s costs and expenses.
It can lead to higher prices for high-quality or unique products. Leading to lower prices for commodities or low-quality products.
It focuses on creating and communicating value to the customer. Focuses on recovering costs and making a profit.
It encourages companies to improve their products and services continuously. Encourages companies to control costs and minimize expenses.
It may result in increased customer satisfaction and loyalty. It may result in lower customer engagement and loyalty.
Examples: luxury goods and premium services. Examples: food, essential goods, and services.
Value-Based Pricing AdvantagesThere are various benefits of this pricing strategy are as follows:
It may lead to a higher profit margin for the company
This strategy works in favor of the seller when a person considers the products prestigious.
While buying a luxury product, buyers only look at the value of the product and ignore the actual possible cost of the product.
Thus, they are ready to pay a high markup leading to an increase in profit margin for the company.
Possible increase in the brand value
In this strategy, there is a constant effort to incorporate the customer’s feedback to include the same in future products to increase the perceived value.
Customer loyalty
When companies ask their customers about their preferences and expectations, it helps them gain their customers’ confidence.
Thus, customers become more loyal.
It gives the company an estimated market demand for its goods.
It gives them an idea of the number of buyers who can afford to purchase their product and are ready to pay a premium price.
Knowing the market demand for a product allows a company to develop supply correspondingly.
It is not always stable
Relying on it to increase profit margin can backfire if a competitor comes with a better product at a competitive price.
Require significant time & resources to fetch customer data
It depends on customer feedback. The company has to constantly spend to get customer feedback and incorporate it time and again in the product.
It applies not only to the features of a product but also to the pricing.
Also, companies trying to create pricing based on the value spend a lot on marketing to make the correct product perception.
Limited customer
A market has a specified number of customers who can afford the high pricing.
A small number of consumers indicates that business growth is finite.
Difficulty in business expansion
It is appropriate for smaller firms that sell highly specialized items.
A person can only apply this strategy to a smaller audience, making it the least desirable option for organizations looking to expand their business.
Competitive market
When a company charges high prices, its competitors can make and sell the same product at a lower price.
As a result, it will share its already limited consumer base and impact its profit.
Increased production costs
Producing customized products is more expensive.
To provide high-quality items, a company will need highly skilled workers.
Final ThoughtsSetting a value-based product price can be challenging since a single price may not work for all customers. However, it can be a powerful tool for building brand value and generating high markups. Before adopting this pricing strategy, businesses must evaluate its suitability for their product. The most effective method lies somewhere between cost-plus and value-based pricing. A good strategy can be to start with cost-plus pricing to cover production costs, build brand value through marketing, and switch to pricing based on value.
Frequently Asked Questions (FAQs)What is value-based pricing?
A pricing strategy that determines a product’s price based on the value it offers to customers rather than its cost is referred to as value-based pricing. The aim is to establish a price that mirrors the product’s perceived value to customers, resulting in increased profits and brand value.
What is value-based and cost-based pricing?
Cost-based pricing bases a product’s price on its production cost plus a markup to cover expenses and make a profit. Value-based pricing bases a product’s price on the value it gives to customers.
Why is Starbucks value-based pricing?
Starbucks is the master of deploying a value-based pricing strategy. They set the target price using research and customer analysis, and each product they sell to customers adds value.
How to determine whether value-based pricing is right for your business?
Value-based pricing works well for businesses whose leaders are sure that their product stands out because it has features that other products on the market don’t have. But more importantly, it is correct when a company has spent sufficient time in the market and created its brand value.
Recommended ArticleWe hope that this EDUCBA information on Value-Based Pricing was beneficial to you. For further guidance on business-related topics, EDUCBA recommends these articles:
Schools Of Jurisprudence Meaning Types
The research or philosophy of law is known as jurisprudence. In order to have a deeper grasp of the legislative process, various jurists and academicians have attempted to explain it in general terms. The foundational principles of natural law, civil law, and international law served as the basis for modern jurisprudence, which emerged in the seventeenth century.
What does School of Jurisprudence define?There is no set or uniform understanding of jurisprudence because people all around the world hold different ideologies and notions. It covers a wide range of topics. A jurist’s discussion of the political circumstances in his or her society reflects the legal system that was in place there at the time. It is thought that the Romans were the first to learn what the meaning of law was. In jurisprudence, policy is combined with other disciplines, like psychology, politics, economics, etc. It is not taken directly from any state assemblies’ or legislatures’ acts.
Types of School of JurisprudenceThere are primarily five schools of thought in law; we will discuss these schools and the leading jurists within them.
Philosophical SchoolIt is referred to as the law of nature and higher law, and it has played a significant role in the history of politics, law, religion, and ethics.
According to Dr. Friedman, as humanity has failed to find absolute justice throughout history, ideas about natural law have also been evolving along with societal changes. Natural law was seen to have a divine origin in prehistoric civilizations, a religious and supernatural foundation in medieval periods, and a strong political and legal foundation in modern times. The natural law theory’s belief in a universal order regulating all men and women is its most significant contribution to the legal system.
The philosophical or moral school is primarily concerned with how legislation relates to particular goals that it is meant to achieve. It takes an effort to investigate the justifications behind the creation of a specific law.
Historical SchoolLegal scholars from the Historical School of Jurisprudence discuss how society and the law are intertwined. The state’s law is made up of all of society’s customs and laws. A community’s particular wants and demands are closely related to the social structure of that society. This idea demonstrates that the rule is the result of historical causes and effects. The law depends on people’s broad awareness. The understanding has existed since the beginning of the public because no one had the authority to act as a sovereign and create laws.
Montesquieu was the first jurist of the Historical School. He claimed in his well-known book, “Spirit of Law,” that the law must adapt to changing society.
Savigny is referred to as the second historian-school jurist.
Realist SchoolMany people’s emotions have an impact on the decisions made by the law. Because the rule is taken into consideration at this school and is treated as truth, this institution is known as the Realist School. The judgments of the judges in the jurisdiction, in particular their mindset, are emphasized in this course. The emphasis at this institution is on the perspective and application of the legal and judicial systems. America and Scandinavia in Europe saw the emergence of the Realist School in the 1880s. America experienced a great deal of decision-making in 1890, and the cases, judgments, and points of view that informed those conclusions were all made public.
Two categories of realist schools exist −
American Realist − The scholars watched the judgments and learned from them in addition to their own experiences.
Scandinavian Realists − The academics only trusted their personal experiences in this regard.
Legal accuracy, according to Jeremy Frank, is a myth, and there is no way to predict the outcome of any wrongdoing since there are many variables and constraints that are left open to different interpretations. He muses over the actions taken by and planned for by jurists and judges. They reach their conclusion by applying the law. But what if both the choice and the facts are incorrect? There is no way to know for sure that judges will be able to understand all of the information and reach the right conclusion every time.
Sociological SchoolAccording to Roscoe Pound, the main characteristics of sociological law are as follows: The sociological school’s proponents place more emphasis on the practical than the abstract components of law.
The abstract ideas of analytical positivism, which place emphasis on the command or power aspects of law as well as the dead weight of previous culture and traditions that served as the primary focus of historical jurisprudence, are utterly rejected by sociological schools.
The following are the main phases through which sociological jurisprudence developed and evolved −
The father of sociological jurisprudence was Auguste Compte (1789–1857). The empirical method relies on observation and experience to create a link between the law and society.
The psychological stage is the third step in the growth of sociological law. Later in the 19th century, psychology had a significant impact on other social sciences, especially law.
The fusion of sociological approaches with those of other social sciences is the final phase of sociological jurisprudence development. It was thus understood that many social sciences represent various facets of human civilization.
Analytical SchoolAlso popular as Imperative school of law, analytical school of law primarily deals with the laws that exist in present form with the objective to analyze. The scholars of this group explained law as the its relation with the state. According to these scholars, law is something the command emanating from the State. John Austin was one of the most proponents of the analytical school; therefore, sometimes, it is also known as Austinian school. Other known scholars are Jeremy Bentham (1748 -1832), Erskine Holland (1835 -1928), and Sir john Salmond (1862 – 1924).
ConclusionThe definition of law and its purposes were greatly aided by the five schools of jurisprudence. Despite differences in the arguments made by different schools’ scholars, all of them shared a desire to “maintain law,” and their only concern was how to better govern the law and administer justice on a broad scale, despite the various modes of justice. The ideas of diverse jurists evolve as time goes on, just as the law does. Even the Indian Constitution is subject to alteration by legislative and judicial interpretation. The Cyber Law, which specifies how cybercrimes will be punished, has been introduced to try to stop these crimes. The Indian Penal Code has also undergone changes in order to better combat these heinous crimes.
Frequently Asked QuestionsQ1. Which school of law explains balancing purpose of jurisprudence?
Ans: The goal of balancing the needs of the individual and the state is fulfilled by the Sociological School of Jurisprudence. This school contends that the current socioeconomic crisis cannot be resolved through the use of the legal framework that is already in place.
Q2. What is the importance of legal philosophy?
Ans: The philosophy of law frequently aims to set law apart from other normative systems, such as morality (see ethics) or other social customs.
Q3. What is the main idea of natural school of jurisprudence?
Ans: A legal doctrine known as “natural law” places special emphasis on the rules of nature. This school of law also stands for the notion that there are laws that apply to all cultures.
Q4. Who is the father of jurisprudence?
Ans: Though Aristotle is popularly known as father of natural law, but Bentham is referred to as the “Father of Jurisprudence.” Austin expanded on his work. The definition of law was initially analyzed by Bentham.
Divide In Excel (Formula, Examples)
Introduction to Divide in Excel
In Excel, division is an arithmetic operation commonly used to divide numbers or values of the cell. It is one of the basic mathematical functions essential for solving complex numeric problems.
Unlike addition, which has built-in functions such as the SUM function, no such function is available for division in Excel. To divide numbers or values of a cell in Excel, you need to start with an equal sign (=), followed by the numbers you want to divide, and put a forward slash (/) between the numbers. Businesses often use the divide formula in Excel to calculate and perform various financial and work management tasks. For instance, they might calculate profit margins, monthly budgets, employee wages, expenditure reports, and other important metrics.
Let’s start by understanding how you can perform division in Excel.
The arithmetic operation or formula for division in Excel starts with an equal sign (=) followed by entering the values or cell references you want to divide and a forward slash (/) between them.
How to Divide Numbers in a Cell in Excel?To divide numbers in a cell, directly type the numbers within the cell and apply the divide formula. For example, if you want to divide 10 by 5, enter “=10/5″ in a cell and press “Enter“. The division formula “=10/5” will give a result of 2.
Note: Please start the formula with an equal sign (=) and use the (/) operator between two values in each cell to get the output. For instance, If you only type 10/5 in a cell, Excel will display 05-Oct. Or else Excel will consider the equation as a date.
Example #1
You can download this Divide Formula Excel Template here – Divide Formula Excel Template
How to Divide Numbers Using Cell References?
For example, we want to divide the Cell A1 value by the Cell B1 value and display the result in Cell C1.
Enter the formula “=A1/B1” in Cell C1 and press “Enter“, where the Cell A1 value is the dividend and Cell B2 value is the divisor. The result will be displayed in Cell C1.
Example #2Suppose you want to divide the value of each cell of a column by a certain number obtained in another cell. You can easily do this task. In the below example, you will learn how to divide the values of column A by the value of Cell B1.
Step 2: Enter the formula =” A1/$B$1” and press “Enter“.
Note: The symbol $ in Excel is used for absolute cell references. In the formula =” A1/$B$1″, the value of the divisor is constant as the value of Cell B1. If you place a dollar sign ($) in front of a row, that row is fixed, and if you place a dollar sign ($) in front of a column, that column is fixed.
Result 2 is displayed in cell C1.
Step 3: Drag the cell with the formula to get the desired output.
Congratulations, you have successfully done this task.
Example #3You can divide column 1 with column 2 by using the division formula. Consider the below table with numbers in columns A and B. Follow the below steps to learn how to divide two columns in Excel.
Step 2: Enter the formula “=B3/C3” in Cell D3, as shown below.
Result 5 is displayed in Cell D3.
Step 3: Drag the formula on the corresponding cell to get the following output.
Example #4Under this method, you will learn to use division operators with other arithmetic operators like subtraction to solve complex division problems.
For example, you have the below data of salespersons and their actual sales in 2023 and 2023. You must calculate the sales growth percentage for the respective salesperson in 2023. Here, you must use the division formula, subtraction, and percentage operator.
Step 2: Enter the formula “=(C3-B3)/B3” in Cell D3
Note: Using this formula, “=(C3-B3)/B3″, you can calculate the sales growth percentage for the respective salesperson.
The output is 9%.
Step 3: Drag the cell with the formula downwards to get the desired output
The above result shows the sales growth percentage for the individual salesperson.
Example # 5We have the sales data for five famous companies (Apple, Tesla, Netflix, Starbucks, and McDonald’s) for 2023 and 2023 and the estimated figures for 2023. We need to calculate the percentage growth rate for each company for 2023 using basic mathematical operators such as division, subtraction, and the percentage operator.
Step 1: Add the title “% Growth in 2023” to column E, as shown below.
According to this formula, we will subtract the sales value of 2023 from 2023 and then divide the result by the sales value 2023. The output is the percentage increase in sales from 2023 to 2023.
Note: In this example, we used the formula’s opening and closing parenthesis, “( )”.
The output is 8%, as shown below.
Note: The formula “=(B2+C2)/D2″ will give a decimal value. Thus, convert this decimal value into %.
Step 4: Drag the cell with the formula to get the result, as shown below.
The future sales growth in percentage for all five companies in 2023 is now ready.
How to Use the Division Operator (/) with Addition (+)?Under this method, you will learn to use the division operator with the addition operator (+) with the help of the following examples.
Example #6In this example, we will calculate the average of the student’s marks in maths and science by using the division and addition operator.
Step 1: Add a new column, “Average“, as shown below.
The formula states to add the marks of Maths and Science subjects and then divide by the total subject, i.e., 2.
Result 84 is displayed, as shown in the below image.
Step 3: Now, drag the cell with the formula to the rest of the cells.
The average score of the students in Maths and Science subjects is displayed.
How to Handle #DIV/0! Error Using IF Function?While executing the division operation on a data set, Excel will display the error of #DIV/0! When the formula tries to divide a number by an empty cell or 0. In the following example, you will learn how to use the IF function, such as the “IFERROR” condition, to prevent and resolve the #DIV/0! Error.
Suppose you have the below table of dividends and divisors. You have applied the division formula to this data, and Excel has shown error #DIV/0! in Cell C3 and Cell C5 because Cell B3 and Cell B5 have no value. Now, you want to overcome this problem.
Step 2: Enter the IFERROR formula “=IFERROR(E2/F2,”)” as shown below and press “Enter“.
Note: The Formula “=IFERROR(E2/F2,”)” indicates that divide the value of Cell E2 by Cell F2, and if there is an empty cell or 0 value, then leave the cell blank in the result column to avoid displaying of the #DIV/0! Error.
Output 4 is displayed.
Step 3: Drag the cell with the formula as shown below.
The result is displayed above, and Cell G3 and Cell G5 are blank instead of #DIV/0! Error.
Things to Remember while Using the Divide Function in Excel
Put an equal sign (=) in the cell before using the divide formula.
While selecting the data for calculation, do not select the row or column headers.
If there is an empty cell or 0 value in the Cell, then Excel will throw an #DIV/0!
You should properly use the opening and closing parenthesis in the division formula. For example, formulas like “=10/4-2” will give 0.5 output, and “=10/(4-2)” will give 5 output. Always remember, the “PEDMAS” is the order of calculations in Excel.
If you want to display only the integer value of a division operation, use the QUOTIENT function of Excel.
Frequently Asked Questions (FAQS)Answer: The symbol or arithmetic operator used to represent divide or division in Microsoft Excel is “/“, a forward slash. The Excel division formula is “=x/y,” where x is the dividend and y is the divisor.
Answer: There are various methods to divide in Excel. You can directly type the numbers in a cell or divide two (or more) numbers by referring to a cell or constant number. As seen in the image below, you must use an equal sign (=) before the division formula and a forward slash (/) between the numbers or cells you want to divide.
Answer: The alternate method for dividing numbers is using the “QUOTIENT” formula. When you want to display only the integer part of a division, use the formula “QUOTIENT(numerator, denominator)”. If a division equation has a remainder value, the QUOTIENT function will only return the integer value as an output. For example,” =3/2” returns 1.5 whereas “=QUOTIENT(3,2)” returns 1, where 1.5 is the remainder, and 1 is the integer/quotient.
Recommended ArticlesThis article has been a guide to Dividing in Excel. Here we discuss the Divide Formula in Excel and How to use Divide Formula in various scenarios using practical examples. Furthermore, you can read our other suggested articles. You also get a downloadable Excel template for your reference.
7 Types Of Digital Marketing With Examples
Digital marketing is a proven method for achieving tangible company benefits. There are many types of digital marketing that get results for the company. But first, we must comprehend what this approach entails, how it operates, and the many sorts of Digital Marketing that may be employed.
It is essential to comprehend each sort of digital marketing if you want to increase traffic, acquire more clients, increase brand awareness, engage teams, or engage your audience.
This guide was developed to assist you in learning more about this topic. Each of the most effective methods of Digital Marketing is described here, along with its benefits and aims, as well as when and how to utilize them.
So, please keep reading and let’s broaden our horizons!
What Is Digital Marketing? Advantages of Digital Marketing [With Infographic] 🖼️6 Best Advantages of Digital Marketing
Geographically diversePeople can view your ad online regardless of where they are (assuming you haven’t restricted your ad geographically). This makes expanding your company’s market reach simple.
Cost-effectivenessYou may use digital marketing to attract people to your blog with only one piece of content as long as it is active. You may set up an email marketing campaign to send messages to certain consumer groups on a regular basis, and you can easily adjust the timetable or content if necessary.
When all is said and done, digital marketing provides you with far more freedom and client interaction for your business.
Quantifiable outcomesTo determine whether your marketing plan is effective, you must determine how many consumers it attracts and how much income it generates. But how can you achieve it with a marketing plan that isn’t digital?
“How did you find us?” is a classic question to ask each customer.
Regrettably, this does not apply to all sectors. Many businesses do not have the opportunity to speak with their clients one-on-one, and surveys do not always yield accurate answers.
Results tracking is straightforward with digital marketing. Whether it’s open email rates, visits to your home page, or direct transactions, digital marketing software and platforms automatically measure the number of targeted conversions.
Customization is SimpleIn a manner that traditional marketing cannot, digital marketing allows you to collect customer data. Digitally acquired data is far more exact and detailed.
Assume you’re a financial services provider who wants to send out unique offers to those who have looked at your offerings. You know that tailoring the offer to the person’s interests would provide better results, so you decide to create two campaigns. The first is for young families who have looked into your life insurance products, and the second is for millennial entrepreneurs who have looked into your retirement plans.
Without automatic tracking, how can you collect all of that data? How many phone records would you have to examine? How many distinct client profiles exist? And how do you know whether or not the brochure you put out was read? The answer is digital marketing!
Increased client interactionOne of the pros of digital marketing is that you may connect with your consumers in real-time with digital marketing. It also enables them to communicate with you.
Consider your social media marketing plan. When your target audience views your most recent post, it’s terrific, but it’s even great when they remark or share it. It implies more buzz for your service or product, as well as greater visibility each time someone enters the conversation.
Your clients will gain from interactivity as well. As customers become active players in your brand’s story, their degree of engagement rises. This sense of belonging can lead to strong brand loyalty.
Conversions that are simple and convenientYour clients may take action right after seeing your ad or content using digital marketing. The most immediate return you can expect with traditional marketing is a phone call immediately after someone sees your ad. But, whether you’re cleaning the dishes,traveling down the interstate, or updating data at work, how frequently do you have time to contact a company?
Now, with no further wait, let us dive into the types of digital marketing with examples.
7 Different Types of Digital Marketing With Examples 1. Search Engine Optimization (SEO)The purpose of SEO is to encourage a company’s website to rank higher in Google search results, resulting in more traffic from search engines. To do so, SEO marketers look for words and phrases that people use to seek information online and include them in their own material. As per studies, SEO includes a variety of factors, including the text on your web pages, how other sites connect to you on the web, and how your website is built. According to chúng tôi an SEO professional may earn roughly $70,058.
With all the benefits of SEO, what are some ways to boost a website’s SEO? It’s critical to recognize that one of the factors that makes SEO difficult is that the answer to this query is always contingent on Google and its most recent algorithm. With that in mind, here are a few of the most crucial factors for SEO strategists and marketers, in general, to grasp how SEO works today:
Content indexingIt’s critical to make it easy for search engines to understand what your site’s content is by including alt text for pictures and text transcripts for video and audio material.
Good link structureIt’s critical that search engines can “crawl” your site structure and discover all of your content quickly. An SEO professional may style links, URLs, and sitemaps in a variety of ways to make them more accessible to site crawlers.
Keywords and targeted keywordsOne of the essential building blocks of SEO is properly employing your keywords – i.e. the search phrases you want your site to be found for – in your content and headers. Stuffing your content with as many keywords and keyword variants as possible is no longer a good idea. Writing high-quality content with keywords in the headers and a few times throughout the crawlable page content is now regarded as best practice and will improve page rankings.
Examples of SEO strategiesOn-page SEO
On-page SEO refers to the changes you make to your website. You make adjustments to components on your website’s various pages in order to appear in more relevant search results.
Off-Page SEO
Off-page SEO refers to factors that aren’t immediately on your website yet have an impact on its ranking. Backlinks are the most well-known. These factors have an influence on where you rank in search results, even if they are not on your website.
Technical SEO
Technical SEO is the final component of SEO. Technical SEO refers to features on your website’s back end that affect how people interact with the front end, such as site speed.
The image below is an example of SEO
The cost of running an ad or promoting your search results is mostly determined by the level of competition for your keywords. Keywords with high competition (i.e., those with a lot of people searching for them and a lot of sites wanting to be discovered for them) will cost more, while keywords with lesser competitiveness will likely cost less.
PPC Ads in Search Engines PPC Ads on Social Networks PPC Display Ads 3. Social Media Marketing(SMM)Instead of being an afterthought, activities must be planned and consistent to be effective. There are several online tools available to automate and schedule social media postings to help keep messages consistent, but marketers should only use automation as a tool, not as a “set it and forget it” solution. If there is no genuine person behind the posts, users will immediately figure it out.
Entrepreneurs that use social media should not be isolated from other marketing functions. Social marketers must collaborate with the rest of the marketing team to ensure that the brand’s message is consistent across all channels, both online and offline.
Analytics is an important component of social media marketing: social media marketers must be adept at assessing the performance of their postings and developing plans based on that information. Another reason marketers should measure and track their initiatives on a regular basis is that this information helps them to demonstrate a campaign’s return on investment and whether it added value to the organization.
Beyond Instagram and Twitter, there are other free avenues for spreading your message. Google My Business, eBay, Facebook Messenger, and Marketplace are some of the other alternatives.
To put it another way, social media marketing is far more difficult than maintaining a personal Facebook or Twitter account. It necessitates a combination of creative thinking and objective, data-driven planning, and it might be a good fit for individuals who appreciate combining these two disciplines. According to chúng tôi a social media analyst with a bachelor’s degree may make around $68,230.
An example of social media marketing is Apple’s – Shotoniphone
The perfect illustration of Apple must be mentioned in social media marketing strategies. Apple’s #ShotOniPhone social media campaign intends to promote user interaction and empower its own consumers to promote the brand. To participate in this user-generated content initiative, users only need to include the hashtag in the description of their social media postings.
The company will utilize the hashtag to announce enhancements in photography features and functionality of each new phone version by allowing users to do so themselves by posting images taken with their iPhones.
Apple has successfully developed a large amount of user-generated material through its user-generated content program, which empowers its own users. Apple has benefited greatly from original and creative material created by brand customers.
Apple did it with their hashtag campaigns #ShotOniPhone, #ShotOniPhone6, #ShotOniPhone7, and the like, with little marketing effort and input and maximum social notoriety.
4. Content MarketingTo raise brand recognition, content marketing employs narrative and information sharing. The ultimate aim is for the reader to take a step toward becoming a client, such as seeking additional information, joining an email list, or purchasing something.
Blog entries, resources like as white papers and e-books, digital videos, podcasts, and more are all examples of “content.” In general, it should deliver value to the consumer first and foremost, rather than simply market the brand or try to sell something. Content marketing is all about developing a long-term, trustworthy relationship with your consumers that can lead to several sales over time rather than just one.
Material marketing works in tandem with other forms of digital marketing: it’s a means to combine SEO search phrases into new website content, and the results may be disseminated via social media and email marketing.
Analyzing your content marketing statistics may reveal a lot about your customers: what are they looking for when they come to your site? What types of content entice people to stay on the site longer and explore? What types of things make them lose interest and leave?
Individuals who like writing, video, and audio creation might consider content marketing. there are a lot of tools for content marketing However, like other aspects of digital marketing, it needs excellent strategic and analytic abilities.
An example of content marketing is Coke’s “Share A Coke” Campaign.
The campaign has since extended all across the world. What was the secret to its success? Personalization.
You felt unique because of Coke. You and your bottle were alone against the world. And content marketing is all about adding a human touch.
Coke wasn’t looking at vanity metrics, retargeting customers, or analyzing internet activity.
Instead, they focused on the most crucial aspect of a customer’s identity: their name. Everyone’s favourite subject is, after all, themselves. Using someone’s name as a starting point for getting them to pay attention is also a good idea.
5. Email MarketingDespite the rise of social media, smartphone apps, and other platforms, email remains one of the most successful marketing tools, according to Rogers. It may be used as part of a content marketing plan to provide value to customers and convert them over time.
According to research, email marketing professionals are competent at not just creating attractive campaigns, but also understanding appropriate audience outreach and monitoring customer interactions and data and making strategic decisions based on that data.
According to Constant Contact, a renowned email marketing software business, there are several things marketers can do to make their emails more appealing to consumers and more likely to be opened.
Among them are:
Make a Sense of Immediacy
Writing email language that informs readers that a special offer is running out of time or that just a limited number of offers are available might boost the number of people who visit your website.
Make Your Email More Personal
Allow recipients to choose their own preferences –
An example of Email marketing is Uber’s mails.
Uber’s emails are elegant in their clarity. Deals and promotions are announced to email subscribers via emails like the one below. writing the best call to action in an email is essential, We like how the first explanation is succinct, with a clear CTA—excellent for recipients perusing the email fast.
These are followed by a more extensive (but still pleasingly basic) step-by-step explanation of how the deal works for those who wish to learn more.
It’s appreciable how consistent Uber’s email design is with its overall brand. Bright colours and geometric patterns are used in emails, much as they are in the app, website, social media photographs, and other components of the visual identity.
6. Mobile MarketingThis sort of digital marketing focuses on reaching out to your target audience via smartphone or tablet. Text messaging, social media, websites, email, and mobile applications are all examples of mobile marketing. Marketers can customize offers or unique content based on a customer’s location or time, such as when they visit a store or attend an event.
Consumers now spend five hours a day on their phones, according to a recent TechCrunch story. This is a 20% rise compared to the fourth quarter of 2023. In addition, users are spending far more time in apps than on mobile browsers. Users spend far more time with apps than they do with television. According to the TechCrunch report, 15 per cent of that app time is spent on entertainment applications like Netflix and Hulu, 19 per cent on Facebook’s mobile app, 12 per cent on other social and messaging apps, and 11 per cent on gaming apps.
According to Retail Dive, 45 per cent of all purchases use a mobile device in some form, whether it’s for research, pricing comparison, or making a purchase. That percentage is 57 per cent among the bulk of Millennials (those born between 1981 and 1997), according to the Pew Research Center.
Marketers understand that you must carry your message to your customers where they are, and one thing is certain: your prospective customers are on their smartphones.
An impressive example of mobile marketing is IKEA’s AR.
IKEA Place allows smartphone users to explore their catalogue as well as see how a piece of furniture will look in its intended setting. The smartphone app does the latter by overlaying a life-scale picture of the object over the backdrop acquired by the camera using Augmented Reality (AR).
IKEA Place now has over 370,000 active users across the world thanks to this innovative approach. Furthermore, this mobile marketing strategy increased engagement since app users spent an average of 8 minutes on the app, up from 3 minutes previously.
7. Affiliate MarketingAffiliate marketing, also known as influencer marketing, has been popular among many organizations as a means of bridging the gap between customers and businesses as internet marketing has grown in significance. However, what exactly is affiliate marketing?
With new media like TikTok, Instagram, Youtube, and blogs becoming a widespread method of entertainment, news, and distribution in recent years, affiliate, or influencer marketing, has risen tremendously. One of the most prominent kinds of internet marketing is affiliate marketing. The affiliate marketing sector is anticipated to expand to $6.8 billion in 2023.
An example of affiliate marketing is – Simple Rate.
“Creating a credit card finding app in the form of an interactive quiz was one of our most successful affiliate marketing campaigns we performed lately,” says Paul Kim of Simple Rate.
“At Simple Rate, we assist individuals, and companies select the perfect credit card, and instead of ranking all the cards in a normal affiliate piece, we design a quiz that takes less than 60 seconds to complete.” The quiz was billed as “Find the right credit card in under 60 seconds,” and the conversion rate was incredible.”
In conclusion,Technology evolves swiftly; today’s popular social networking app may be all but forgotten by next year, yet many marketing fundamentals stay constant. (As stated above)
We hope the above comprehensive article on the types of digital marketing with their examples has been helpful for you. What do you feel regarding the same?
How Bond Issuers Make Money With Types And Examples?
Definition of Bond Issuer
Start Your Free Investment Banking Course
Download Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others
ExplanationBond issuers are the entities that are issuing the bonds for the investors. The bond issuers pay the required principal amount at the maturity date. The bond issuers are the entities fully owned by the government entities, the municipalities, SPVs, etc. The bonds issue to mitigate the fund’s requirement. The bond issuer pays the investor interest and repays the principal outstanding amount on the maturity date.
Example of Bond Issuers Types of Bond IssuersThere are almost four to five types of bond issuers. These are Firms, Government entities, Municipalities, Special Purpose Vehicles, etc.
Firms: Whenever firms require funds to finance their projects or any working capital requirement arises, they issue bonds. The issued bonds can have different credit ratings compared to the firm’s credit rating. Therefore the investors should analyze the pointers of the bond and then make the investment decision. Firms issue different classes of bonds, and thus the investor has choices to make.
Government: Government entities also issue a bond to the public to finance their projects. The US Treasury bonds are one of the most popular government entity bonds. The rating of these bonds is very high, and thus the investors get attractive returns from these bonds. The government bonds also differ with the countries. In some developed countries, government-issued bonds are less riskier than those of developing countries. Therefore the investor should be keen enough to understand the bond policies before investing their proceeds.
Municipalities: The Municipalities are bond issuers issuing bonds to the public. The Municipalities also act as the government in this case. The bonds are highly rated, like the bonds issued by government entities. The Municipalities get support from the government so that the municipalities can gain the faith and trust of the investors.
Special Purpose Vehicle: Certain firms or government entities issue bonds for special purposes or projects. These bonds are special to finance certain projects, including building and repairing lands and bridges, etc.
How Bond Issuers Make Money? Advantages
The investors also get attractive hybrid options to invest in the bonds.
The bond issuer can utilize the money to process their projects.
Investors can save taxes while investing in the bond.
The investors can also get some interest payments periodically.
The interest payments made to the bond issuers are also deductible and have no tax implications.
The retention of the capital is best possible in the case of issuing the bonds.
It has also been seen that the issuance of bonds is cheaper than that of the shares. Issuing shares can add more cost, and the risk is the same as any other investment.
The bond issuer is not required to pay higher returns to the investors than to the issuers of shares.
The bond issuers are required to pay the interest payment to the investors. Therefore it is like an obligation for the bond issuers.
The investors of these bonds get fewer returns than the investors of the share of any company.
The obligation to repay the principal amount is always there in the case of the bonds.
It has also been seen that the investors’ risk is lower if they invest in the company’s debt rather than the firms’ bonds or bonds issued by government entities.
Conclusion – Bond Issuer Recommended ArticlesUpdate the detailed information about Inflation: Meaning, Types, Formula, Examples, Causes on the Moimoishop.com website. We hope the article's content will meet your needs, and we will regularly update the information to provide you with the fastest and most accurate information. Have a great day!