Business Studies Notes PDF

Topic 1 ROLE Strategic role in marketing goods and services - Goods: physical products that are either produced or purchased by a company to sell them. - Services: A service is something intangible, which can't be physically touched or stored. - Profit maximization:...

Topic 1 ROLE Strategic role in marketing goods and services - Goods: physical products that are either produced or purchased by a company to sell them. - Services: A service is something intangible, which can't be physically touched or stored. - Profit maximization: occurs when there is a maximum difference between the total revenue coming into the business and the total cost being paid out. Marketing: - Definition: Marketing is a total system of interacting activities designed to plan, price, promote, and distribute products to present to potential customers. - 4 main features of marketing: - Involves a wide range of activities - It is directed at a wide range of goods and services or ideas - Stresses the importance of satisfying exchanges - It is not limited to activities or business activities. 1 Interdependence with other key business functions - Definition: Interdependence refers to the mutual dependence the key functions have on one another. The key business functions work best when they overlap. Each function area depends on the support of the others if it is to perform at capacity. 2 Production, selling, and marketing approaches ♡ Production: Focused on a business production of goods and services rather than what the customer wants and needs. - The attitude towards marketing: ‘ If we make it, they will buy it - There was high demand for products thus creating high demand on the factories. ♡ Sales/Selling: Emphasized selling due to increased competition. Once the basic needs and wants of the consumers are met if allowed this allows them to choose between the competing businesses. - The businesses would then invest in advertising. - Employ sales representatives - instore & door to door ♡ However, there was a major flaw which was the businesses still neglecting the needs of the customers. Rather than doing market research, the business would make whatever they wanted. ♡ Marketing: focuses on finding out what the customers want - through market research and then satisfying that. ❥ STAGE 1: - Customers started to influence what they purchased. - The motivation began that the business would produce what the customer desired & the customer would then buy the good/service. ❥ STAGE 2: - Corporate social responsibility (CSR) started to make an influence on the market as consumers became more environmentally aware. - Customer orientation refers to the process of collecting information from customers & basing marketing decisions & practices on customers' wants and interests. Types of markets - Resource, industrial, intermediate, consumer, mass, and niche markets ♡ Market: Defined as: ❥ Need or want a product ❥ Have the money to purchase the product ❥ Are willing to spend their money to obtain the product ❥ Are socially and legally authorized to purchase the product ♡ Resource: those individuals or groups that are engaged in all forms of primary production, including mining agriculture, forestry, and fishing. ♡ Industrial: includes - ❥ Purchasing products to use in the production of other products 3  ❥ Includes businesses that produce goods or provide services used in the production of other products. ❥ Involves manufacturers, service providers, and other industrial sections like construction or manufacturing. ❥ Primary customers are other businesses. ♡ Intermediate: ❥ Businesses that buy goods to resell or rent them ❥ The majority of goods are first said to the intermediate market ❥ Refers to businesses that act as intermediaries between producers and consumers ❥ Businesses facilitate movement of goods/services from producers to consumers. ❥ Consumer Market: consists of individuals that is, members of a household who plan to use or consume the products they buy. Consumers do not intend to use the products to make other goods & services can be divided into mass or niche markets. ♡ Mass: a business that produces a large amount of one particular product ♡ Niche: more specialized goods & services. 4  INFLUENCES Factors influencing customer choice - psychological, sociocultural, economic, government ♡ Psychological: refers to personal characteristics that affect out buying behavior. It relates to how people think and develop their attitudes towards certain products or brands. These factors can include ❥ Perception: is the opinion that a customer has about a particular product or service. when products are bought the consumer will often act on their perceptions of the product. ❥ Motives: the reason that makes an individual do something. The main motives are comfort, health, safety, ambition, taste, pleasure, fear, amusement, cleanliness, and the approval of others. ❥ Attitude: an attitude is a person's overall feeling about an object or activity. This attitude can influence the success or failure of the business marketing strategy. If the attuites are negative this can often force the business to make changes to their strategies. ❥ Personality and self-image: an individual’s personality is the collection of all the behaviors and characteristics that make up that person thus influencing the products and services they may buy. ❥ Learning: refers to changes in an individual’s behavior caused by information and experiences. If a customer sees an advertisement for Coca-Cola that shows other people enjoying the new flavor, the consumer would think they would like it as well. ♡ Sociocultural: refers to forces exerted externally by other people and groups that affect customer behavior, these include: ❥ Social class: this factor can be influenced by factors such as education, occupation, and income. Social class influences the type, quality and quantity of products a customer buys. ❥ Cultural and subculture: refers to all learned values, beliefs behaviors, and traditions shared by a society. This influences our buying behavior because it infiltrates all that we do in our everyday life. ❥ Family and roles: the consumer's family and role within the family can influence buying behavior, for example, market research shows that most women are making decisions related to healthcare products, food, and laundry supplies. ❥ Peer groups: refer to the group of people whom the consumer closely identifies with, they then adopt their attitudes, values, and beliefs a customer’s buying behavior may change to match the rest of the group’s beliefs and attitudes. ♡ Economic: can be split into two categories 5  ❥ Socioeconomic status: this is determined by income, occupation, and education. This has a significant influence on the types of goods and services a consumer will buy. People from a high socioeconomic background are more likely to append their income to goods that are perceived to be prestigious. ❥ Economic forces: they influence a business’s capacity to compete and a customer’s willingness and ability to spend. Economies do not always experience constant growth. There are two distinct phases ❥ Boom: This refers to a period of low unemployment and rising incomes. This is when businesses and consumers are optimistic about the future and are willing to produce and buy more. ❥ Recession: This refers to high unemployment levels and incomes falling dramatically. Customers and businesses lack confidence in the economy and if this phase for an extended period of time it can set a mood of deep pessimism. Consumers become more price-conscious. ♡ Government: one key government factor influencing customer choice is the federal government’s regulation of the economy. The government will put in place policies that expand or contract the level of economic activity. These policies directly or indirectly influence business activity and customer’s spending habits therefore will influence the marketing plan. ❥ These can take place in the following ways: ❥ Fiscal policy: this is the actions taken by the federal government to influence economic activity through the use of its budget government ie, government spending, or taxation. ❥ Monetary policy: Is used bu the Reserve Bank of Australia to influence the level of economic activity through the use of interest rates. Interest rates are significant in determining the level of spending in the economy and the level of credit that consumers and businesses will access. Increasing interest rates is designed to reduce consumer and business spending as the cost of borrowing has increased and more of their income is needed to repay their debt 6 Consumer Law ♡ Consumer law involves all regulations and statutes that seek to create a more equitable balance for buyers in the marketplace and prevent sellers from using dishonest tactics. ♡ The Competition and Consumer Act 2010 has two major purposes: 1. To protect consumers against undesirable practices, such as misrepresenting the contents of products, their place of production, and misleading and deceptive advertising. 2. To regulate certain trade practices that restrict competition. The government also wants to ensure many businesses are operating at any obe time in the same market to encourage competition. ♡ Breaches of the act (CCA) can result in the ACC or relevant consumer agency taking criminal proceedings against the individual or business concerned. These can be either fines or penalties. WIMP: 7 Ethical influences ♡ Businesses are expected to behave in morally acceptable ways - but they are not legally bound to do so ♡ Societies expectations about what is right and what is wrong ♡ It may be considered wrong or unethical but technically still legal Some ethical criticism of marketing: ♡ Stereotypical images of males & females ♡ Use of sex to sell products ♡ Invasion of privacy. TAPES: 8  ❤ Processes The marketing process - SMEDI A marketing plan gives a business purpose and direction. A marketing plan is a system of organizing the market of a firm through clear objectives and decisions on aspects including nuggets for expenditure and revenue. The marketing process are the core element reflected in the marketing plan, these include: ♡ Situation analysis ♡ Market research ♡ Establishing market objectives ♡ Identifying target markets 9  ♡ Developing marketing strats ♡ Implementation, monitoring, and controlling Situation analysis A situational analysis is what a business does to ascertain this. The company must undertake market research, such as a SWOT analysis and product life-cycle examination. There are two key elements to a situational analysis when presenting a marketing plan: ♡ A SWOT analysis ♡ An examination of the business/product life cycle SWOT: ♡ It involves identifying and analyzing the business's internal strengths and weaknesses and the opportunities and threats from the external environment. ♡ This provides the business with the information needed to complete the situational analysis and gives a clear indication of the business position compared with its competitors 10 Product life cycle: ♡ This is an assessment of the product's position on the product life cycle. This is necessary because different marketing stats must be used at various stages in the product life cycle. ♡ The product life cycle consists of Introduction, growth, maturity, and decline. ♡ Introduction: Description: When the business tries to increase consumer awareness and build a market share for a new product Product: Brand and reliability are established Price: Is often noticeably lower than competitors' prices to gain a market Promotion: Directed at early buyers and users. Communications seek to educate potential customers about the product. Distribution: It is selective which enables consumers to gradually form and acceptance of the product. ♡ Growth: Description: Brand acceptance and market share are actively pursued by the producers of the product Product: Quality is maintained and improved and support services are provided Price: Price per unit of production is maintained as the firm enjoys increased consumer demand and a growing market share. Promotion: Now seeks a wider audience Distribution: distribution channels are increased as the product becomes more popular. ♡ Maturity: Description: sales plateau as the market becomes saturated Product: Features and packaging in an attempt to differentiate the product from those competitors Price: Price may need to be adjusted to hold off competitors and maintain market share. Promotion: Continues to suggest the product is the best on the market Distribution: Incentives may be needed to encourage preference over competitors ♡ Decline: Description: sales begin to decline as the business begins to face serval options Product: Product maintained with some improvements or rejuvenation. Cut the losses by selling it to another business Price: Price is reduced to sell the remaining stock Promotion: promotion is discontinued 11  Distribution: Channels are reduced and the product is only offered to loyal customers Market research The process of systematically collecting. Recording and analyzing information concerning a specific marketing problem - Businesses are attempting to minimize the risk - the risk of customers disliking their goods and services - They do this because excessive risk often results in market failure in which minimizing risk by developing a more accurate and responsive marketing plan is needed. This a three step process: 1. Determining informational needs 2. Data collection 3. Data analysis and interception 1 - Determining information needs Businesses need to clearly deine their informational needs so that resources are not wasted, it cost time and money to perform market research therefore, cost and benefits must be compared/assessed. 2 - Data collection - Primary and Secondary sources Information - usually facts and figures - relevant to the defined marketing problem ♡ Primary data: data that is collected by marketing function ♡ Secondary data: using sources of information that have previously been collected by another indivdial/organisation. 12 Main methods of primary data collection: 13 Main methods of Secondary data collection: 3 - Data analysis and interpretation Once data has been collected, conclusions need to be drawn. The raw data is of little value until it has been anaylzed - Statistical interpretation analysis: process of focusing on the data that represents average, typical or deviations from typical patterns All data needs to be dsiplayed n a table format. 14 Establishing market objectives Marketing objectives are the overall marketing goals to be achieved through the marketing plan. The objectives shoulbe closely align=ned ot overall business goals, but more customer orienated than goals for the entire business. SMART goals Common marketing objectives ♡ Increase market share ♡ Expansion of product range ♡ Maximising customer service ♡ Expand into new geographic markets Increase market share - ♡ Market share refers to the percentage of total sales a business has compared with that of its competitors in a particular market ♡ A business might be looking to expand their market share as it allows them to earn a noticeable profit in their revenue. Expansion of product mix - 15  ♡ The total range of products offered by a business is referred to as the business’s produc mix. ♡ Businesses are usually keen to expand their product mix, as it will increase their profits in the long term ♡ The same product mix will not remain effective for long because cusomer’s taste and preferences change over ime, and demand for a particular product may decrease. Maximinsing customer service - ♡ Customer service means responding to the needs and problems o the customer. ♡ High levels of customer service will result in improved customer satifcatio and a positive reaction from customers towards the products they purchase. Expand into new geographic markets - ♡ A business might choose to expand into new geographic markets as a marketing objective to fnd more customer and grows its sale ♡ This expansio allows the business to reach new customers but also reduces the risk of the business solely depending on sales in that country Identifing target markets A target market is a group of preset and potential customers to which a business intends to sell its product. Customers with in the target market share similar characteristics such as age, income, lifestyle, location, and spending patterns Businesses need to identify and select certain target markets in order for their resources to be allocated effectively. Certain customers have certain wants and needs, and a business's activities need to be tailored to these in order to maximise their chances of success. Primary target markets: is the segment at which most of the marketing resources are directed Secondary target markets: is usually a smaller and less important market segment. Why identify an select a target market? It allows the busines to direct its marketing strategies to a specific target market. This allows the business to better satisfy the wants and needs of its target market. ♡ use its marketing resources more efficiently, which is likely to result in the marketing campaigns being more cost effective and time efficient ♡ promotion material is more relevant to the customers’ needs, and is more likely to be noticed 16  ♡ better understand the consumer buying behaviour of the target market collect data more effectively and make comparisons within the target market over time refine the marketing strategies used to influence customer choice. Types of markets: - Mass Marketing - is when a business targets its products to the mass markets, the business does not modify its marketing tactics/strats and keeps everything entirely the same. - Niche marketing - is when a business selects a narrow segment of the market based on similar characteristic such as wants an needs of the customer. - Segmentation marketing - Market segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics. - A business can decide to segment its market to ensure that appropriate promotional and pricing strategies are developed. 17