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Theme 1 - Markets - Coggle Diagram

- - - - sales volume and sales value targets
        
        market and sales growth targets
        
        market share targets
        
        knowledge of market size, which enables realistic targets to be set
      - Dynamic markets: markets that are constantly changing as consumers' needs and wants change
        
        Dynamic markets do not stand still, constantly changing. Illustrated by growth of online shopping, possible to buy anything, anytime, anywhere.
        
        Online shopping impacted the way businesses operate and the need for an online presence, involving:
        
        the creation of a high-quality, user-friendly website
        
        a carefully targeted audience
        
        content that is increasingly personalised
        
        mobile capabilities for the modern consumers
        
        integrated sales channels
        
        Benefits for online shopping include:
        
        more detailed info about consumers available
        
        relationships more easily built with customers
        
        greater contact between consumers and businesses
        
        social media very important
        
        businesses can sell anywhere in the world
    - - How competition affects the market
  - - - Benefits
        
        Niche marketing
        
        may benefit from price skimming
        
        customer loyalty
        
        niche markets can be highly profitable
        
        Mass marketing
        
        produce on a large scale
        
        capital intensive
        
        minimise unit cost
        
        Downsides
        
        Niche marketing
        
        may be difficult to generate sufficient profit
        
        if profitable could attract new competition
        
        Mass marketing
        
        more competitive
      - Difference between risk & uncertainty
        
        Risk
        
        Known
        
        can be measured
        
        may be minimised
        
        possible to exert some control
        
        Uncertainty
        
        future events are unknown
        
        cannot be measured
        
        difficult to minimise
        
        difficult to control
        
        Risk: the potential for gaining something of value that is known, and you have some control over, whereas uncertainty is a potentially unpredictable and uncontrollable outcome.
  - - - A product-oriented business is one whose primary focus is on its product and on the skills, knowledge and systems that support that product
        
        A market-oriented business is one that organises its activities, products and services around the wants and needs of the consumer
        
        Tools of product
        
        product testing
        
        product focus
        
        product research
        
        Tools of market
        
        market testing
        
        customer focus
        
        market research
    - - Market research helps by:
        
        studying market trends and characteristics
        
        establishing consumer profiles
        
        analysing market shares and the potential for existing products
        
        forecasting sakes for existing products
        
        analysing and forecasting sales of new products
        
        Primary Research
        
        is also known as field research
        
        collects first-hand information
        
        answers specific issues or questions
        
        can be expensive
        
        Secondary Research
        
        is second-hand research
        
        uses data that already exist
        
        is cheap to collect
        
        may not be direectly related to the business
        
        Types:
        
        Published reports
        
        Government/agency data
        
        Internet
        
        Types:
        
        Surveys/questionaries
        
        observation
        
        focus groups
        
        test marketing
      - Qualitative and Quantitative Research
        
        Qualitative market research
        
        is designed to discover attitudes and opinions
        
        is collected from small groups known as focus groups
        
        may enable a business to design more appealing products
        
        It can reveal consumer reactions to:
        
        the product
        
        pricing
        
        packaging
        
        Quantitative market research
        
        is the collection of data on consumer views
        
        can be statistically analysed
        
        can be represented in charts and graphs
    - - This is undertaken because:
        
        it is impossible to interview everyone
        
        it reduces the cost of research
        But there are limitations:
        
        the sample size may be too small
        
        there may be sample bias
        
        Sampling: the selection of a representation group of consumers from a larger population.
  - - - Objective is to have a brand stand out in consumer's minds
        
        Segmentation ---> targeting ---> positioning
        
        Benefits:
        
        more effective marketing
        
        resources will be used more effectively
        
        sales and market share may increase
        
        Drawbacks:
        
        may overlook a potentially profitable segment
        
        changes in taste and fashion could be overlooked
    - - diagram with two key features; price & quality
        
        enables business to establish the position of its product(s) in the market.
        
        reveals where most competition is
        
        may identify gaps in market
      - Competitive advantage
        
        advantage over rivals through lower costs or sustainable point of product differentiation
        
        Product differentiation
        
        process of distinguishing a product or service from others in order to make it more attractive to the target market
        
        Aims:
        
        insulate the product from actions of competitors
        
        allow increased prices without a major fall in demand
        
        Added Value:
        
        Difference between the price a good or service is sold at and the cost of producing it
        
        Factors:
        
        Price
        
        Performance
        
        Durability
        
        Quality
        
        Reliability
        
        Customisation
        
        Features
        
        Customisation:
        
        Production of a good or service tailored to the needs of a specific consumer
- - - - Characteristics;
        
        Motivation
        
        Creativity
        
        Drive
        
        Vision
        
        Risk tolerance
        
        Resilience
        
        Motives
        
        maximisng profit: satisfying
        
        independence
        
        flexibility and control
        
        ethics: social entrenpeneurship
    - - Key objectives;
        
        survival
        
        profit maximisation
        
        Other objectives;
        
        sales maximisation
        
        market share
        
        cost efficiency
        
        employee welfare
        
        customer satisfaction
        
        social objectives
        
        Objectives should be SMART
        
        Specific
        
        Measurable
        
        Achievable
        
        Realistic
        
        Time based
  - - - Other forms of business
        
        Franchising - a method of growth where an existing business (the franchisor) grants another party (the franchisee) the right to use its trade name and sell its products or services
        Social enterprising - an organisation that has business objectives other than making profit
        
        Franchising
        
        Benefits
        
        Tried and tested formula
        
        support in the setting up from franchisor
        
        advise and training from franchisor
        
        possibility of national advertising from franchisor
        
        Easier access to finance
        
        Drawbacks
        
        Possible high initial fee for franchisee
        
        royalties to be paid to franchisor
        
        decision making governed by franchisor
        
        reputation dependant on franchisee
        
        Social enterprising
        
        Objectives
        
        provide services to local communities
        
        give people job-related skills
        
        fair-trading activities
    - - Features
        
        have legal identity separate from that of their owners
        
        owners benefit from limited liability (restricts the financial responsibility of shareholders for a company's debts to the amount they have individually invested)
        
        Shareholders' liability may be limited:
        
        by the value of the shares that each shareholder has purchased
        
        to the amount he or she has agreed to pay in the event of the business being wound up - more common with not-for-profit businesses
      - Two main types
        
        Private limited companies
        
        Normally much smaller than public limited companies
        
        Share capital must not exceed £50000
        
        'Ltd' must be included after the company's name
        
        Often family businesses
        
        Public limited company
        
        Must have the term 'plc' after their name
        
        minimum capital of £50000
        
        Have to publish more details of their financial affairs than private limited companies
    - - Features
        
        owners and their business are not treated as separate elements
        
        owners' private possessions are at risk in the event of failure
        
        sole traders and partners have unlimited liability
      - Two main types
        
        Sole traders (or proprietors)
        
        owned by a single person
        
        common in retailing and services such as plumbing and hairdressing
        
        Partnership
        
        comprise between 2 and 20 people
        
        usually based on a Deed of Partnership
        
        some partners may be 'sleeping partners'
        
        partnerships are common in the professions: for example, dentists and accountants
- - - - Factors leading to change in supply
        
        Changes in cost of production
        
        introduction of new technology
        
        indirect taxes
        
        government subsidies
        
        external shocks
        
        Indirect taxes - taxes imposed by government on goods or services, such as excise duty and VAT.
  - - - Effect on price of shifts in demand/supply curves
        
        D Curve moves right (rises) - Price Up
        D Curve moves left (falls) - Price down
        S Curve moves left (falls) - Price Up
        S Curve moves right (falls) - Price down
- - - - Pricing strategies:
        
        Price skimming
        
        Price penetration
        
        Cost plus
        
        Predatory
        
        Competitive
        
        Psychological
        
        Factors influencing choice of strategy:
        
        PED
        
        Level of Competition
        
        Strength of brand
        
        Level of differentiation
        
        Stage of product life cycle
        
        Costs and need for profit
    - - Marketing strategy - the overall marketing plan for reaching people and turning them into customers for the product or service provided
    - - Distribution
        
        Distribution - range of activities necessary to make the product available to customers
        Multichannel distribution - where firms use more than one type of distribution channel, e.g., shops, online, click and collect etc
  - - - Promotion - bringing consumers' attention to a product or business.
    - - Branding - process of creating a name, symbol. design or other feature that distinguishes an organisation's product or service from its rivals
  - - - Split into Five Stages: Development, Introduction, Growth, Maturity, and Decline.
        
        Decline stage may be prolonged by implementing extension strategies such as;
        
        finding new markets for existing products
        
        changing the appearance or packaging
    - - Cash Cow (low market growth & high relative market share)
        
        Profitable products
        
        generate more cash than needed to maintain market share
        
        Problem Child (high market growth & low relative market share)
        
        Rapid growth
        
        Poor profit margins
        
        Enormous demand for cash
        
        Star (high market growth & relative market share)
        
        Market leaders
        
        fast growing
        
        substantial profits
        
        require substantial investment to finance growth
        
        The Boston Matrix
        
        Possible decisions from Boston Matrix
        
        Cash Cows can be milked for their revenue and profit
        
        Problem Children need to be turned into rising stars
        
        Dogs might be discontinued
        
        Star products could become future Cash Cows
        
        a business does not want to many products in a single category
        
        1 more item...
    - - The Logic Chain: B2B vs B2C in developing customer loyalty
        
        B2B
        
        Tailoring to Customer
        
        Personal Service
        
        Reliability
        
        B2C
        
        Establishing strong image
        
        Branding
        
        Mass Distribution
        
        Customer Loyalty
- - - - How businesses view their staff:
        
        As an Asset
        
        Staff more likely to be on permanent contracts
        
        Staff more likely to have training
        
        Staff more likely to be salaried
        
        Labour turnover likely to be low
        
        As a Cost
        
        Staff likely on flexible or temporary contracts
        
        Minimal training
        
        Lower pay and hourly rates
        
        Higher labour turnover rates
        
        Flexible Workforce
        
        One that adapts to the changing needs of a business achieved through;
        
        multi-skilling
        
        part-time and temporary workers
        
        flexible hours and home working
        
        outsourcing (another company contracted to perform certain business functions allowing significant increases in capacity when needed)
        
        Distinction between dismissal and redundancy
        
        Dismissal
        
        after appropriate warnings have been given
        
        gross misconduct
        
        end of contract
        
        Redundancy
        
        New technology
        
        the requirement of the business to cut costs
        
        business is closing down
      - Recruitment, selection and training
        
        Recruitment and selection
        
        Internal Candidates
        
        Limited choice
        
        may have set ideas
        
        quicker and cheaper to recruit
        
        may be motivational
        
        External Candidates
        
        Greater choice
        
        may bring new ideas
        
        slower and more costly to recruit
        
        may be de-motivate existing staff
        
        Costs
        
        Recruitment
        
        advertising
        
        time
        
        interviewing and testing
        
        expenses
        
        May be minimised by keeping Labour Turnover (proportion of staff that leave a business during a specified time period, usually per year) at a low level
        
        Training
        
        Induction (initial first join training)
        
        on the job
        
        off the job
        
        Benefits and Costs
        
        1 more item...
  - - - Hierarchy
        
        Chain of command
        
        lines of authority
        
        span of control
        
        Types of structure
        
        tall
        
        flat
        
        matrix (one in which the reporting relationships are set up as a grid rather than as a traditional hierarchy, where employees have dual reporting relationships)
        
        Impacts on Efficiency & Motivation
        
        Efficiency
        
        Communication
        
        Duplication of tasks
        
        Departments failing to work together
        
        tasks overlooked
        
        Motivation
        
        1 more item...
      - Centralised structure:
        
        Decisions made at the top...
        
        ..restricting autonomy for local managers
        
        ...but giving consistency to customers
        
        Decentralised structure:
        
        Decisions made locally, closer to customers...
        
        ... giving local managers more responsibility
        
        ...probably making them (and staff) more motivated
    - - Importance of employee motivation
        
        productivity
        
        recruitment and retention
        
        lower absenteeism
        
        innovation
        
        profitability
      - Motivation theories
        
        Theorist - Taylor (Scientific)
        
        Bethlehem Steel Company:
        
        Focus on the job being done and efficiency
        
        Believed employees motivated by money
        
        Introduced ideas of work study and management consultancy
        
        Theorist - Mayo (Human Relations)
        
        Hawthorne Studies:
        
        Greater focus on needs of employees
        
        Type of job and level of supervision affects motivation
        
        Group relationships also important
        
        Theorist - Maslow (Neo-Human Relations)
        
        Hierarchy of needs:
        
        Needs include basic, security, social, esteem and self-actualisation
        
        Theorist Herzberg (Neo-Human Relations)
        
        Research focused on accountants and engineers:
        
        Factors influencing people to work divided into motivators and hygiene factors
      - piece-rate pay
        
        commission
        
        profit-related pay
        
        performance-related pay
        
        bonus
        
        Financial incentives
        
        Non-financial incentives
        
        delegation: assignment of authority to carry out specific tasks
        
        consolation: discussing decisions with others
        
        empowerment: sharing power, giving employees greater control
        
        team working: willingness of a group to work together on tasks
        
        flexible working: start to finish times
        
        job enrichment: making jobs more challenging
        
        job rotation: where employees are shifted around jobs of the same level
        
        job enlargement: increase of tasks on the same level
    - - Leaders
        
        Focus on the vision: the future
        
        look outward
        
        create change
        
        sell the plan
        
        Managers
        
        Focus on achieving objectives set
        
        look inward
        
        manage change
        
        tell how to implement
        
        Distinction between leadership & management
      - Types of leadership
        
        Autocratic: leader makes decisions without consulting others
        
        democratic: leader makes the final decisions but includes others in the process
        
        laissez faire: leader allows team members freedom in their work and in meeting deadlines
        
        paternalistic: leader consults and tries to make decisions in the best interest of all