SCO 2.2. Primary Tasks Involved in Running a Business

Transcription

1 SCO 2.2 Primary Tasks Involved in Running a Business - Marketing and Advertising - Production - Management and Human Resources - Financial Planning and Analysis - Legal Issues and Responsibilities

2 Marketing

3 What is Marketing? The management task that links the business to the customer by identifying and meeting the needs of customers profitably. Get the right product at the right price to the right place at the right time. Marketing has TWO fundamental roles: 1. To sell what a business makes 2. Manage a business s brand or brands

4 Marketing involves Market research Product development Sales Advertising Distribution Promotion Without marketing, not much would get sold. Customers wouldn t know what goods or services were being sold, would not know about trends, how products improved. Manufacturers wouldn t have research to know what to make, wouldn t have the distribution channels to get the products into hands of the consumers.

5 The 4 P s Referred to as The Marketing Mix All four are essential to the success of a marketing plan for either a product or a service 4 P s stand for Product Price Place Promotion A mix of the four is necessary to sell a product

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7 The Marketing Mix Think of a Cake All cakes need 4 things flour, egg, sugar, milk However, you can play with the flavour of your cake by changing the ingredients slightly Example: Sweeter cake add more sugar

8 The Marketing Mix The same thing is true with the marketing mix You can very the type of message you are sending out about your product/service by mixing different elements of each of the P s Example: Want to be seen as a luxury item make the price high, have limited selection

9 Product Refers to the benefits of buying a product What need does the service/product fulfill Quality What will the quality of your service/product be? Some people really want quality (Ferrarri) vs. others that don t really matter (McD s) Features How will your product/service differ from the competition What will you do differently? Design How is it going to look? Consumers often will purchase because it looks cool

10 Product Packaging if your selling a product what image will the packaging communicate? If a service how will the appearance of your operation communicate an image about your business Range of Products what complimentary products may you offer If service: Will you offer other products with your service Example: Nike Sporting goods, sneakers, trackpants, t- shirts, etc. Example: Think of the range of products that Apple has

11 Price Marketing is responsible for establishing the price of their service/product Must consider the costs of all the inputs (materials, labour, etc) Mark-up Price How much profit do you want to make on every product/customer Example: Selling Cupcakes Every cupcake uses $1 of materials and labour roughly costs $0.25 to make one muffin You must charge at least $1.25 to break-even

12 Price The price of your product or service tells the customer a lot about your product $550 $1550

13 Price Different Pricing Strategies Competition basing your prices on those of the competition Penetration making your price low while new just to get some business Bundle putting the product/service with another item and bundling the prices Psychological making the price say something about the quality of your product

14 Place Simply refers to how & where you are going to sell the product to the consumer Channels of Distribution Direct Distribution selling your product directly to the consumer Brick & Mortar vs. Virtual Store Indirect Distribution sold through a 3 rd party What retailers are the best for reaching your Target Market? Example: Selling protein powder where do I sell?

15 Place For a service : where are you going to locate in order to best reach your target market You want to be in an area that your target market frequents Says something about your business Notice how car dealerships are always on the outskirts of town or close to a highway? Brantford Commons

16 Promotion A successful product or service means nothing unless the benefit of that product/service can be communicated to the Target Market There are many ways to get the word out How many can we think of...

17 Promotion Public Relations Advertising Sales Buzz

18 Marketing Mix Activity Let s Rank each of the elements of the marketing mix in terms of importance for the following products/services/businesses Set Up a blank piece of paper like this: Business Product Price Place Promotion

19 Air Canada

20 The GAP

21 Nike

22 Pepsi

23 Tim Horton s

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25 The Two C s of Marketing In order to adequately put together the four P s of marketing, businesses must also consider two major external factors: 1. The Competition 2. The Consumer (The target market)

26 1. The Competitive Market The competitive market consists of the total dollars in sales spent on a particular type of product. Example: The US soft drink industry is worth $68 billion dollars. The portion of that $68 billion that was Coca Cola sales or any other company s sales is called market share. Market share is expressed in terms of % s.

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29 2007 Estimated U.S Market Share for Major Soft Drink Brands ($68 billion) BRAND % Market Share Coca-Cola Classic 16.5 Pepsi 12.3 Diet Coke 10.2 Mountain Dew 6.5 Diet Pepsi 5.9 Sprite 5.8 Dr. Pepper 5.7 Total 62.9% Note: That leaves 37.1% of the market for the other 200 brands of soft drinks available in the market.

30 Increasing a Company s Market Share There are two ways in which a company can increase its market share. 1. Creating a new segment of the market Example: Bottled water in the 1990 s. Energy drinks in 2000 s. 2. Taking sales away from your competition

31 Market Segment Market Segment Market segment is a part of the overall market that has similar characteristics. Example: Within the soft drink market, you have: 1. The flavoured segment, such as Root Beer, Orange Crush, etc; 2. The diet segment such as Diet Coke, Diet Pepsi; and 3. The energy drink segment such as Red Bull.

32 Types of Competition Direct Competition Companies who sell similar products to ours. Examples: Coke vs. pepsi One brand of sunscreen versus another brand Loblaws versus Metro Companies compete through quality, price, design, features, benefits and simply image preference. Indirect Competition Products and/or companies that don t necessarily sell similar or related products. Examples: Will you go to the movies or go bowling instead? Will you fly or will you take the train? Will you go out to dinner or spend it on a new outfit instead?

33 2. The Consumer Market Companies also compete with each other by studying the types of consumers who buy their products. The store clerk is not asking for your postal code because s/he has a personal interest in you but the company s/he works for does. The better a company knows their customers, they better equipped they are to know what to do to target similar consumers and increase their sales.

34 The Consumer Market Consumers can be identified or targeted in at least two ways: 1. Through demographics 2. Through lifestyle characteristics Understanding the categories under which consumers fit, helps marketers when making pricing, advertising, product development and distribution decisions.

35 a. Demographics Demographics Organizing individuals into categories such as: 1. Age 2. Gender 3. Family Life Cycle 4. Income Level 5. Education Level 6. Ethnicity and Culture

36 Age Demographics Age often defines our tastes, needs, and our wants. Examples: Teenagers want.. Adults are interested in. Seniors are interested in.

37 Age Demographics Gatekeepers The person making the purchasing decision, but may not be the consumer Example: Parents may decide upon the cereal to purchase for their child to consume, thus affecting what features may be advertised for parents (low in sugar). Saturday morning cartoons may still feature a cereal commercial with a cartoon character for the child to identify with.

38 Gender Demographics Times have changed and products whose advertising use to target a particular gender is now changing to target the other or/and both. Examples: More women are making the purchasing decision when it comes to buying a car, tools, and sporting equipment. Hotel rooms added hair dryers and ironing boards as more women entered the workplace and business industry.

39 b. Family Life Cycle Demographics Needs, wants, and interests typically vary depending on what stage in life one is in. Examples: 1. Newly married couples are interested in 2. Parents with a new baby are interested in.. 3. A couple with 3 teenagers are interested in 4. Retired seniors are interested in.

40 Income Level Demographics Business selling luxury goods and services are interested in learning about wealthy consumers. Most businesses target average incomes and compete for the discretionary income of consumers. Examples Postal codes indicate the area in which someone lives. Income levels can be estimated based on the type of homes found in most areas. A company selling a luxury yaught is not going to advertise in the Penny Saver, but rather a luxury travel magazine.

41 Discretionary Income Discretionary Income Income/money that is not committed to pay for basic necessities such as food, clothing, and shelter. Teenagers generally have the highest amount of discretionary income from their part-time jobs. Why? Disposable Income is used to pay for basic necessities, such as food, clothing and shelter.

42 Ethnicity and Culture Demographics Canada s diverse population brings with it diverse interests, wants and needs. Examples: Restaurants targeting various cultural food tastes Newspapers and magazines are available in over 100 languages in Canada.

43 2. Lifestyle or Psychographics Characteristics Characteristics including the way people live, - their values, beliefs, and motivations. Examples: 1. Environmentally conscious person may purchase. 2. An extreme sports enthusiast may be interested in. 3. A tech savy enthusiast may be interested in