Business Summary Lesson Notes PDF

**[Business summary lesson notes]** **Friday 4^th^ September 2024 --** Marketing aims to identify, anticipate, and satisfy consumer needs profitably. Mass markets target broad market segments with large-scale production and low prices due to economies of scale, leading to lower profit margins but...

**[Business summary lesson notes]** **Friday 4^th^ September 2024 --** Marketing aims to identify, anticipate, and satisfy consumer needs profitably. Mass markets target broad market segments with large-scale production and low prices due to economies of scale, leading to lower profit margins but greater affordability, such as Primark. Niche markets, like Louis Vuitton, focus on specialized products for smaller consumer groups, leading to higher production costs, higher prices, and smaller sales volumes but greater profit margins. Market size and share are measured by sales volume or value, and market share is calculated as a percentage of total sales. Branding differentiates products, adds value, increases pricing power, and influences a business's market position through perceived quality and legal protection. **12^th^ September 2024 --** Market research involves gathering and analysing data to reduce risks, understand customers, and identify opportunities. It helps predict demand and avoid wasted resources. Research can be qualitative, providing detailed non-numerical insights, or quantitative, offering measurable data. Primary research collects new, tailored data but is costly, while secondary research uses existing data, which is cheaper but may be outdated. Methods like questionnaires, focus groups, and product trials gather insights, with questionnaires offering both qualitative and quantitative data. Focus groups provide in-depth opinions, while product trials help refine products before launch, though all methods carry risks of bias. **17^th^ September 2024 --** Supply refers to the amount of a good that suppliers are willing and able to offer at a given price. Several factors affect supply, including changes in production costs (e.g., raw materials, wages, rent), which can reduce supply if costs rise. The introduction of technology, such as automation, can increase supply by lowering production costs. Indirect taxes like VAT reduce supply as they raise costs. Government subsidies, on the other hand, encourage more supply by lowering production expenses. External shocks can also impact supply, either increasing or decreasing it. **18^th^ September 2024** - Operations management focuses on designing, managing, and improving the processes that transform inputs into outputs---goods and services. Key targets include maximizing efficiency (capacity utilization), minimizing unit costs, and maximizing quality. Unit costs are calculated as total costs divided by the number of units produced and are influenced by production volume, supply costs, and labour productivity. Capacity utilization measures current output as a percentage of maximum potential output. High capacity utilization reduces fixed costs per unit, while low utilization increases them, leading to implications like unmotivated staff and potential business rationalization. Improving capacity can involve boosting demand, optimizing usage during off-peak times, or adjusting resources. **20^th^ September 2024 -** Price Elasticity of Demand (PED): PED measures how demand changes in response to price changes. If price rises, demand typically falls, and vice versa. Inelastic products (PED \< 1, between 0 and -1) have less responsive demand due to high differentiation, few substitutes, and strong brand loyalty. Elastic products (PED \> 1) have more responsive demand, as they lack differentiation, have many substitutes, and low brand loyalty. Strategy: For inelastic products, raising prices causes a smaller demand fall, increasing revenue. For elastic products, lowering prices leads to a larger demand rise, boosting revenue. **21^st^ September 2024** - Income Elasticity of Demand (YED): YED measures how demand changes with income. Normal necessary products have low but positive YED (e.g., milk), with demand rising slightly as income increases. Inferior goods have negative YED, where demand decreases as income rises. The importance of YED includes helping firms predict sales during economic changes and diversifying product ranges to mitigate risks. High YED and low PED products (luxuries) increase profit margins. Strategies: When income rises, focus on normal luxury products with high YED. When income falls, emphasize elastic and inferior goods. In a stable economy, prioritize inelastic products for consistent demand. **20^th^ November 2024** - Opportunity Cost and Business Objectives (1.5.5): Risk refers to the chance of loss or damage, such as business failure, lost investment, debt liability, difficulty restarting, or the stigma of failure. The risk/return tradeoff highlights the balance between potential profit and risk taken. Opportunity cost is the next best alternative forgone when making a choice. Business objectives include survival, profit maximization, market share, cost efficiency, employee welfare, customer satisfaction, and social goals. A mission statement defines a business's core purpose and focus, remaining constant over time. Setting objectives provides direction, motivates stakeholders, enables strategic planning, informs lenders, and measures business performance. **21^st^ November 2024** - The design mix evolves to reflect social trends, such as addressing resource depletion through waste minimization, reuse, recycling, and ethical sourcing. Promotion involves communicating with consumers to sell products, with aims including introducing new products, reminding or reassuring customers, countering rivals, and enhancing business image. Types of promotion include advertising (e.g., TV), sales promotions (e.g., vouchers), PR, personal selling, direct marketing (e.g., email), sponsorships, and digital communications (e.g., social media). Factors influencing promotion choice include cost, target market, marketing strategy, and the product's life cycle stage. **22^nd^ November 2024** - The choice of pricing strategy depends on factors like brand strength (stronger brands can charge higher prices), production costs, target market, and product life cycle stage (e.g., lower prices in saturation/decline phases to clear stock). Other influences include differentiation, competition level, and price elasticity of demand (higher revenue if price-sensitive). Strategies include: competitive pricing (matching rivals), price skimming (high initial price to recoup R&D costs), penetration pricing (low introductory price to build market share), predatory pricing (aggressive cuts to eliminate competition), cost-plus pricing (adding a percentage to production costs), and dynamic/personalized pricing (adapting prices by time or customer willingness to pay). **23^rd^ November 2024** - Product portfolio analysis examines each product or brand to improve market performance. The product life cycle helps businesses plan their marketing mix and allocate resources effectively, though it has limitations, such as uncertainty due to external shocks, variations in cycle length, and few products following the classic cycle. Extension strategies can prolong a product\'s life, such as: Product: Introducing new versions, adding features, offering limited editions, or updating packaging. Price: Reducing prices to attract customers or offering promotions to increase awareness. Place: Exploring new distribution channels or expanding to international/online markets. Promotion: Targeting existing customers or new markets with tailored campaigns. **24^th^ November 2024-** YED is affected by the availability and type of substitutes; products with higher-quality substitutes are often inferior. Types of products: Necessities are consistently purchased, while luxury goods depend on income levels. Products taking up a larger share of income are more income elastic. Customer loyalty improves with excellent communication, personalization, and preferential treatment. The Boston Matrix categorizes products: Cash cows: High market share in slow-growing markets, mature life cycle stage, large positive cash flow, low advertising costs. Strategies: Defend market share, reduce investment, and use profits for other products. Stars: High share in fast-growing markets, high marketing costs, neutral to positive cash flow. Strategies: Invest to sustain growth and outpace competitors. Dogs: Low market share in mature markets, negative cash flow, little profitability. Strategies: Phase out or sell off. Problem children: Low share in growing markets, uncertain potential. Strategies: Invest selectively or re-launch. The matrix helps analyze portfolios but is limited by its snapshot nature and lack of profitability insight. **25^th^ November 2024** - Distribution involves making products or services available to customers when and where they need them. Methods: Retailing: Physical shops where customers can try products, view displays, and receive advice, enhancing the shopping experience. E-tailing: Online retailing, offering global reach, 24/7 availability, and lower costs without physical spaces. Wholesalers: Purchase large quantities from producers, break them into smaller units for retailers, and reduce transport costs. Factors influencing distribution: Product type (e.g., exclusive designer goods), speed requirements (e.g., perishables), and distance. Social trends: Distribution adapts as more goods transition into online services, reducing reliance on traditional methods. **29^th^ November 2024** - Entrepreneurs take calculated risks but may face failure, debt, stigma, or difficulty restarting. Opportunity cost refers to the next best alternative forgone when making a choice. Business objectives: Survival: Breaking even during tough times by reducing costs or prices without harming customer experience to establish a market presence. Profit maximisation: Focused on increasing sales and reducing costs to retain profits for investment and stakeholder rewards. Drawback: short-termism. Sales maximisation: Achieved via lower prices, staff motivation, and advertising. Benefits market share but risks neglecting long-term customer relationships. Market share: Selling more than competitors to assess performance, gain supplier leverage, and reduce costs. Cost efficiency: Cutting costs through minimum wages, layoffs, subcontracting, or cheaper suppliers to increase profit margins. Employee welfare: Providing benefits like insurance or on-site facilities boosts loyalty, productivity, and retention. Customer satisfaction: Researching and meeting customer needs through service, pricing, and range reduces complaints and encourages repeat sales. Social objectives (CSR): Reducing environmental impact, paying fair wages, and societal support create a unique selling point, improve image, and may lower costs.