BUSINESS MANAGEMENT

1. BUSINESS MANAGEMENT 4.1 What are the Key Decisions that Businesses Make?

2. Key Business Decisions What will its price be? Who will we employ? Where will we produce the goods? What product will we make? Will we grow?

3. What Product to Produce? • Market Research • The Marketing Mix • Methods of Promotion

4. Market Research Since Marketing is about giving the customer what they want, it makes sense to try to find out what that is. FIELD research is finding the information out yourself. This is also known as PRIMARY research. • GOOD POINTS • It’s useful for finding out new information. • You can use questionnaires, telephonesurveys, producttesting etc. • the information will be up-to-date, relevant and specific. • BUT • It’s expensive to collect, it’s time consuming and needs a large sample size to be accurate. Would you mind answering a few questions for us?

5. Market Research DESK research is finding out by using someone else’s work. This is also known as SECONDARY research. • GOOD POINTS • It’s useful for looking at the whole market and analysing past trends to predict the future. • It involves looking at market research reports, newspaper articles, government publications etc. • the information will be cheaper than field researchand it should be instantly available. • BUT • It’s not always relevant to your needs and can often be out-of-date.

6. Market Research • Market research provides managers with information about what customers want and need and what will influence them to buy a product. • Market research is used to find out: • Consumer wants regarding existing products • What makes consumers buy a firm’s products • What customers think of new products • What customers what from future products • What competitors are doing to satisfy customers

7. Methods of Market Research

8. USING A QUESTIONNAIRE • Questionnaires are used to obtain meaningful information from a large and varied group of consumers. • The business will analyse the responses and modify the product/service to appeal to the market

9. HINTS ON PREPARING QUESTIONNAIRES • Questions should not rely heavily on the respondent’s memory • Begin with a few factual, easy to answer questions • Include some closed Yes/No response question • Follow up closed questions with open questions • Finish with a filter question designed to place the respondent in a market segment

10. Marketing - What is it? Marketing is more than just selling or advertising - it is the art of making it as easy as possible to get potential customers to buy your product.

11. The 4 Ps of the Marketing Mix Product - the firm must come up with a product that people will want to buy Price- The price must be one that the customer thinks is good value for money Marketing Mix Promotion- The product must be promoted so that potential customers know it exists Place- The product must be for sale in a place the customer will find convenient

12. The marketing mix (4 Ps) cannot be studied separately and decisions about any one of them should not made without an overall strategic vision. This will lead to the 4 Ps being welded into an integrated mix. • Eg, there is no point in setting low prices for a product that is to be sold through exclusive retailers and advertised in high income readership papers and magazines Credit

13. Promotion/Advertising • Businesses advertise for 4 reasons: • To make consumers aware of new products • To remind consumers about existing products • To persuade consumers to switch from rival products • To improve the image of the business Advertising can be either informative where the product is described and only facts are given, or persuasive where they try to convince the consumer they need the product by using celebrities for example (celebrity endorsement)

14. Promotion Methods

15. Advertising Methods

16. Choosing a Method of Advertising Credit

17. Branding • Branding was originally used to tell one person's cattle from another

18. Now … • A brand is the name we recognise when we see a product – i.e. it is used to tell one product from another. • Many are well-known and easily recognised – they are used to help persuade the public to buy one product rather than another

19. Mobile phone Fizzy juice Sportswear Fast food Cat food Baked beans Breakfast cereal Crisps Write down the first brand name you think of as I read out some products Did many people say the same brand name for each product? If so, this is probably the “market leader”

20. Can you name some Scottish Brands?

21. Now some Global brands WORLD’S TOP 4 BRANDS

22. What is a Logo? A logo is a symbol or mark used to identify a product or brand Companies will spend a lot of money having an appropriate logo designed for them – it often reflects the name of the company or the nature of their business

23. Importance of Branding A brandis a product which in the eyes of customers is seen as different from other similar products. Branding helps differentiate one product from another. • Strong branding means that the firm can charge a premium price because the product is perceived as high quality, it has high visibility due to the amount of advertising and brand loyalty. Credit • Brands are facing challenges – customers are more price conscious and there has been an increase in the number of quality “own brands”

24. Importance of Branding Some customers are faithful to one particular product/brand. Marketeers strive to persuade customers that their product is better than competitors’ products and obtain brand loyalty which would allow them to charge higher prices. Organisations may add an existing brand name to a new product to increase the products chances for success. Credit

25. Price The main pricing decision that an organisation takes is whether to charge: • A low price in order to attract sales. This makes it possible for a successful firm to sell large quantities at low costs. • An average price in relation to competitors. The firm will need to use other elements of the marketing-mix to compete ie product, promotion and place • A high price. Firms can charge a high price if they are seen as being better than their rivals in meeting the needs of customers.

26. Price Charging the right price is very important. You will want to make sure you cover your costs and make a profit. Undercutting competitors would get sales but if image is important, charging a low price might give the message that the product is cheap and nasty!

27. When to use the Pricing Strategies Credit

28. Markets are segmented into different groups of people. The main ways of doing this are: Age: eg the teenage market or the over 55’s Social class: class A (professional to class E (unemployed) We’re all different ages - we want different things Gender: men and women eg both use bikes but they have a different design Location: Haggis is more popular in Scotland than in London Culture or religion: different groups have their own unique products eg bagels, lassi etc.

29. Product • Be market-led, not product-led: find out what your customers want by using market research and then make it, rather than making a product and then trying to sell it • Get the detail of the product right: the design must be fit for the purpose; the product name must be catchy; there must be a broad product range to give all your potential customers options. Credit • Know your product’s Life Cycle: Introduction, growth, maturity, decline • Make your product different from the competition: this is what all firms are after – product differentiation.

30. How to Prolong Product Life Cycle • Change or modify the product • Alter distribution pattern • Change the price • Use a promotional campaign Credit

31. Place • The ‘place’ is where the final exchange occurs. • Refers to all activities undertaken by companies in distributing products to targeted consumers. Shops Shopping Centres Shopping Centres Shopping Centres Shopping Centres Retail Parks Retail Parks Direct Selling/ Mail Order Direct Selling/ Mail Order Internet Shopping Internet Shopping Internet Shopping

32. In Store On line

33. Website Retail Outlets Mail Order Catalogue

34. Effects of Technologyon “Place” • New technology has changed the ‘place’ where the final exchange occurs. • For example, banking was always carried out across the counter in a bank. We now use: • automated tellers • telephone banking • online computer banking

35. The Internet • Many products now available via the internet • 24/7 access for customers • Wider choice for customers • Customers shop in comfort of their own home • Products often cheaper (fewer overheads) • Businesses have larger, worldwide market • Fewer costs involved – may not require retail property

36. Place MANUFACTURERS A B D C Eg direct from farmer to customer Company warehouse Wholesalers Eg Bookers Retailers Eg Tesco Company outlets eg Ikea Retailers eg Soroba Shop CONSUMERS

37. Advantages and Disadvantages of Different Channels Credit

38. Who to Employ When looking for new staff, organisations must consider • Skills • Qualifications • Funds available

39. Who to Employ – People v Machines CAPITAL INTENSIVE • Technology and equipment used more than human labour • Used in flow production eg car assembly factories

40. Who to Employ – People v Machines LABOUR INTENSIVE • Human labour is used in greater proportion than capital • Used in job production or small scale processes

41. CAPITAL INTENSIVE

42. LABOUR INTENSIVE

43. Industries Improved by Technology • Large scale production – assembly lines • Health services – eg scanners, life support equipment • Communications – TV, radio, telephone systems, satellites, internet

44. Whether to Grow • Increase size of premises • Amount of funds available • Number of workers available • Amount of equipment, technology, vehicles • Number and variety of products Increasing Sales Volume means increasing number of items sold Increasing Sales Revenue means increasing the money received from sales

45. Combination of Factors of Production • Land • Labour • Capital • Enterprise Car factory requires lots of land and capital Credit Farmers require large amount of land Designers require labour and capital

46. FOUNDATION/GENERAL What to produce Market research Marketing mix - 4Ps Methods of promotion Effect of promotion on demand What to charge Factors determining price Different pricing strategies Who to employ Factors affecting employment eg skills, qualifications etc People versus machines Improving products services through technology Where to produce Location decisions (see 3.1) Whether to grow How growth affects sales and profits CREDIT Explain why businesses may vary elements of the marketing mix Draw and explain stages in the product life cycle Suggest extension strategies to prolong product life cycle Explain importance of branding Suggest and justify different types of advertising and promotion Select and justify appropriate pricing strategy Advantages and disadvantages of different channels of distribution Describe interdependence between the factors of production You need to know how businesses decide …