Management (Business)
From ZuluNotes - Free Leaving Cert Notes
Marketing is very important as it helps the business to make a lot of money.
Contents |
Definition Of Marketing:
Finding out what consumers want Making a product that will satisfy their needs Persuading them to buy that product
Market Research
Collecting, analysing and reporting info about marketing issues to make good decisions Two Ways of doing this: Desk research: Info already there. Secondary Data Field research: Collecting original information. Primary Data
Desk Research (secondary)
Uses information that someone else has already found. Inexpensive. Sometimes info doesn’t exist or is out of date.
Obtained from:
- Internal reports: From own sales reports, What products are most popular, what shop is most successful & so on.
- Government Publications: Government have a range of free info. Market research and market statistics are included.
- Internet: A business can get info off the web. The web has two important sources of information:
- Websites have been created to promote there products and views - User groups tell the business that there are people who like a certain thing.
Field Research (primary)
This research has never been done before. The researcher goes out into the field and collects info from consumer. Expensive and time consuming
Obtained from:
- Observation: Researchers can watch the consumers, they do not tell the consumers they are being watched.
- Consumer Panel (Focus group): Groups of people who are monitored to find out what makes them buy things.
- Survey: Involves interviewing consumers directly. Phone/Mail/Internet/Person. Consumers complete a questionnaire.
Importance Of Market Research:
Can help save the business money in the long run. By finding out in advance what consumers like and don’t, the business avoids making products they don’t like.
Reduces the risk of failure for the product and the business. By asking consumers what they want, the business can make such product because they are meeting consumer demands
Helps a business improve its advertising Ask a consumer what they think of an ad campaign.. Have they seen it? Did they like it?… Ect.
Helps managers decide the best price, packaging and design to use. Its very important the business chooses the correct form in order to maximise sales.
Market Segmentation:
The first thing a business must do is split the market up into different groups. This is called market segmentations. It involves dividing the whole market for a product into separate and distinct groups.
The main ways to segment a market are: Geographic segmentation: Satisfying local needs Demographic segmentations: Bias of different people.
Advantages:
- Helps a business establish a presence.. If you set your business up focusing on a segment. Noticed quicker.
- Helps a business to increase its sales, If it offers its products to a neglected segment.
- Helps a business lower costs by not marketing to everyone and just to their target market
Target Market
After a business segments a market, it chooses a particular segment to aim its product at. Its called a target market.
Niche Market
A small subset within the target market. A narrowly defined group within a market for a product/service that have different needs to other consumers. Willing to pay a higher price. They focus very much on consumer.
Marketing Concept
States that the consumer is the most important person in the business When the consumer is happy they will buy lots from the business.
When they are treated well:
- They are happy so they buy more products. Leads to increase in profits.
- They tell their friends and word of mouth spreads. Leads to better reputation.
- There is no reason to complain. Fewer returns and repairs.
Marketing Strategy/Plan
A written plan that sets out the businesses marketing objectives and the means in which it will achieve these.
It involves the following steps:
- Investigate the market to develop business opportunities
- Conduct a SWOT analysis and spot a gap in the market to make the money
- Select a target market:
- Split the market into different segments. Target one or more of these
- Developing a marketing mix:
- Research about the target market to develop the four strategies. Price, Promotion, Product, Place.
Benefits:
- Sets out the steps a business must take in order to attract and keep customers.
- Helps the business controll its progress and messure with goals set.
- Show potential investors that the business knows its market well
Marketing Mix
Consists of four tools that a business can use to persuade customers to buy its products.
1. Product. Packaging and brand name it uses.
Product brand name.
A brand name is when a business gives its product a name and/or a symbol to make it easy to identify.
A product is given a brand name for these reasons:
1. Businesses can charge a higher price. Increase in profits. - branded goods are better quality
2. Helps a business increase sales. - easier for consumer to buy the product
3. Branding makes consumers “brand loyal” - stick with product even when price goes up.
4. Its easier to bring out new products once it has a famous name. - people know the brand
5. A Bargaining tool against retailers. - they will get a good price for shelf life.
Product Packaging.
Involves designing and making containers and wrappers for the product.
1. Protects the product
2. Gives an image to the product
3. Used to make a convenient size for consumers
4. Gives information about product
Product Life Cycle The product life cycle charts the five stages of a products sales over time.
 Introduction: Sales usually grow very slow at first. Few people have heard of it. Money (loads) is spent to promote, and advertise. Price Skimming Strategy is used at first.
Growth: Sales begin to increase rapidly. New competitors enter the market.
Maturity: Reaches its best. Sale growth slows down Sales have reaches highest level. Large profits are being made.
Saturation Not on chart but is in between maturity and decline Growth stops Cut prices New and improved are brought out
Decline Sales stop Product falls rapidly Can be because of technology, consumers tastes or competition Withdrawn from market
2. Price
Amount of money the business charges for its products.
Factors that determine the price a business sets for its products
1. Cost Must be at least equal to how much it was made for. (breakeven price)
2. Competitors Price If the competitors product is better. Charges lower. If the competitors product is inferior. Charge higher If the competitors product is similar. Similar price.
3. Consumers’ perceptions a prices. Must be aware of what consumers are willing to pay
4. Legal Regulations The government can set a max or min price for selling goods.
Strategies for setting the price.
Price skimming Strategy. Business charges high price at start so they can make back all promotion money
Penetration Pricing Strategy. Charges so price so it gets more consumers in at the beginning.
Price Discrimination Strategy. Charges different consumers, different prices.
Loss Lender Sell below cost price. Aim: attract customers so more will be sold.
Psychological Pricing. High prices = high quality Low prices = Low quality
Price- Breakeven Charts.
The min price a business must charge is one that is equal to cost. Known as breakeven.
A business cost can be classified as: > Fixed. Cost never changes no matter how much it sells : rent > Variable. Cost changes as number of products sold changes: ingredients.
These are formulas for working out BE in Units & €.
B.E units • Fixed costs ¸ (price - variable cost)
B.E € · BEP in units x Price
Margin Of Safety
The MOS is the difference between a business forecast sales and its BEP
Margin Of Safety: Forecast sales in units - BEP in Units.
Breakeven Chart Steps in drawing a breakeven chart:
Work out the breakeven point, profit and margin or safety first. > A business’s profits is defines as Total Revenue - Total Costs. > Breakeven is when total revenue and total costs are equal. 0 profit / 0 loss > Must draw total revenue and total cost lines.
Step 1: To draw to units axis: Go as high as forecast sales in units (given in question) Go up in gaps that can fit in the breakeven point as well.
Step 2: Draw fixed cost line A straight line coming out of the number for fixed costs parallel to the horizontal axis.
Step 3: Draw the total revenue line by plotting the three points you work out in the table below:
Total Revenue Line Number of units X selling price = total revenue 0 Breakeven Point in units Forecast sales
Step 4:
Draw the Total cost line by plotting the three points you work out in the table below:
Total Cost Line Number Of Units X variable cost per unit = Total variable costs + Fixed costs = Total Cost 0 Breakeven Point In Units Forecast sales
What a breakeven chart looks like  What they are used for: Work out how many products a business must sell just to breakeven Work out the profit or loss they will have given any level of sales Work out the amount the business can drop before it starts to lose money Work out what effect a change in price will have Work out how many products must be sold to make a profit.
