Business Management - Intermediate 2Business Decision Areas © Copyright free to Business Education Network members 2007/2008B108/078 – BDA 1

Business Management - Intermediate 2Business Decision Areas © Copyright free to Business Education Network members 2007/2008B108/078 – BDA 2

Business Management - Intermediate 2Business Decision Areas © Copyright free to Business Education Network members 2007/2008B108/078 – BDA 3

Business Management - Intermediate 2Business Decision Areas © Copyright free to Business Education Network members 2007/2008B108/078 – BDA 4 BUSINESS DECISION AREAS Marketing The Marketing Concept The Marketing Mix Market Research

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Marketing 1.The Marketing Concept 2.The Marketing Mix 3.Market Research B108/078 – BDA – Marketing

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ The Marketing Concept Marketing is involved in finding out what consumers need and want in order to produce the right product at the right time. Marketing is viewed as essential in order to reduce the risk of business failure, particularly in a competitive environment. B108/078 – BDA – Marketing Concept

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Marketing involves: i.identifying consumer needs and wants ii.anticipating future consumer needs and wants iii.satisfying consumer needs and wants 1. The Marketing Concept - continued B108/078 – BDA – Marketing Concept iv.to inform or remind consumers about the product v.to increase or maintain market share

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ The Marketing function is specifically involved with: Pricing – high or low price strategy; Place – how the product/service gets to the customer; Promotions including advertising, to inform and persuade; Market research ie to find out what markets want now and in the future; Public relations and publicity. Product design, research and development; 1. The Marketing Concept - continued B108/078 – BDA – Marketing Concept

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Market share This refers to the % of the total potential market that the business attracts. A high market share can help to secure the survival and market growth of the business. A high market share can create brand loyalty and allow a business to have greater flexibility in marketing strategy. 1. The Marketing Concept - continued B108/078 – BDA – Marketing Concept

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Market led and product led organisations i.Market led organisations establish a market and tailor their product and service to suit the needs and wants of that market. highly competitive markets Typical features include; lots of similar products on the market a high risk of failure 1. The Marketing Concept - continued B108/078 – BDA – Marketing Concept

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ ii.Product led organisations provide a product and/or a service in the hope that a market exists. low competition Typical features include; a unique product with few alternatives strong advertising in support of the product’s USP (Unique Selling Point) 1. The Marketing Concept - continued B108/078 – BDA – Marketing Concept

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ The Marketing Mix and the 4Ps Product – Price – Place – Promotion. A business has to ‘mix’ these 4Ps in order to provide a USP (Unique Selling Point) for its product/products The ‘mix’ will change over time in order to make sure that the product/service continues to be successful. 2. The Marketing Mix B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ i.PRODUCT/SERVICE The product or service itself. It can be the actual product – design/colour as well as offering guarantees and after sales service. PRODUCT TERMMEANINGEXAMPLE Actual productWhat it isShampoo Core productWhat its main purpose is To clean hair Augmented product Additional featuresAnti-dandruff, for blondes etc 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ The product life-cycle time sales Development 2Introduction 3Growth 4Maturity 5Saturation 6Decline This shows the different phases that a product will pass through over time. Some products will take years to pass through the stages and some may take only weeks. 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ When a product reaches saturation, the business may adopt one of the following strategies in order to extend the life of the product. time sales Extended life Improve the product/ packaging. Change the price. Alter the channel of distribution. Change the promotion and advertising. 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ ii.PRICE The amount that a consumer is prepared to pay for a good or a service. The price can be high/low or market. Pricing strategies Penetration pricing Low price strategy Entering a highly competitive market, prices are set lower than competitors. Destroyer pricing Low price strategy Where a firm wants to eliminate competition and sets artificially low prices to achieve this. 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Promotional pricing Low price strategy In order to inject life into a product or to clear stocks, prices are set low for a limited period of time. Loss leadersLow price strategy In order to create an impression of ‘value for money’ a firm will set a low price for some of its popular products. Profits are made on the total consumer purchase. Competitive pricing Market price strategy In order to retain custom where there is little difference between products, firms will price according to their competitors. Price discrimination High and low Some firms will offer their product at different prices dependent upon circumstances. Examples include phone charges at different times of the day and holidays at different times of the year. 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Market skimming High price strategy In order to cash in on initial sales of a unique and highly desirable product in a non- competitive market. As competition increases, prices are lowered. 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ iii.PLACE The place where the product or service will be available for the customer to buy – eg retail outlet or direct through the Internet. MANUFACTURER WHOLESALER RETAILER CONSUMER The channel of distribution will depend upon: the product being sold. the size of the market. the finance available. the desired image for the product. any legal restrictions. the reliability of the ‘chain’. 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ iv.PROMOTION The ways that a business can use to help attract custom and sell their products and services (this includes advertising). Promotion Persuades consumers to buy Reminds consumers of a products existence Informs consumers about a product 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Into the pipeline Promotions point of sale displays dealer loaders sale or return dealer competitions dealer bonuses credit facilities Out of the pipeline Promotions free samples credit facilities demonstrations competitions BOGOFs bonus packs free offers coupons/vouchers Manufacturers to retailersRetailers to consumers 2. The Marketing Mix - continued B108/078 – BDA – The Marketing Mix

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Businesses carry out Market Research so that they can: Identify consumer demands find out how they view existing products. find out what their wants are for future products. This will make sure that the business will satisfy their market in the future. This will make sure that the business is satisfying their market currently. Market research can also help the business to discover new markets for their products. 3. Market Research B108/078 – BDA – Marketing Research

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Why is market research important? It can help to keep ahead of competition. It can help to indicate the size of the market available. It can help the firm to become ‘Market Led’ and therefore improve chances of success. It can help to forecast future market growth. It can help to provide information to provide the best marketing mix (4Ps). It can help to identify suitable target markets. 3. Market Research - continued B108/078 – BDA – Marketing Research

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Market research can be: Primary research (field research) First hand research obtained for a specific purpose by the business. Examples include: test marketing consumer panels interviews surveys observation 3. Market Research - continued B108/078 – BDA – Marketing Research

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Market research can be: Secondary research (desk research) Second hand information which has been researched by someone else and then used by the business. Examples include: sales records on-line databases newspaper articles and periodicals government reports and statistics 3. Market Research - continued B108/078 – BDA – Marketing Research

Business Management - Intermediate 2Business Decision Areas - Marketing © Copyright free to Business Education Network members 2007/ Advantages and Disadvantages of Primary and Secondary research. RESEARCHADVANTAGESDISADVANTAGES PrimaryUp-to-date information.Costly to obtain. Reliable – collected for a specific purpose and will most likely meet the needs of the organisation. Time consuming to obtain and requires experts to collect if it is going to be of value. SecondaryCheap to obtain as it already exists. Could be out of date information, containing bias and available to competitors. Quicker to obtain and readily available. Information may not be ideal for your purposes, ie not complete. 3. Market Research - continued B108/078 – BDA – Marketing Research