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Market Research
Market research is the process of gathering and
interpreting data about customers and competitors
within an organisation’s target market.
Purpose of Market Research
Market research is carried out to:
Help organisations make marketing decisions
Reduce risk
Purpose of Market Research
Data may be gathered for different reasons e.g. to
identify current and future needs of consumers, the
price customers will pay for a product or the success of
a promotional campaign.
Primary Research
Primary research involves finding out new, first-hand
information. This is called primary data.
Methods of primary research include:
Questionnaires
Focus groups
Observation
Secondary Research Secondary research involves gathering existing
information. This is called secondary data.
Sources of secondary data include:
Market research reports
Trade journals
Government statistics
Sales and customer records
Quantitative Research
Quantitative market research involves finding
numerical data
Quantitative data is generally collected from large
samples and is easy to analyse
Methods of collecting quantitative data include
written and online questionnaires
Qualitative Research
Qualitative research involves finding out opinions,
attitudes and feelings
Often more useful than quantitative data but is more
difficult to collect and analyse
Methods of collecting qualitative data include focus
groups and in-depth interviews
Marketing Mix
Marketing is a business philosophy whose primary
objective is the realization of profit through customer
satisfaction.
It is wrong to think of marketing as a set of activities,
notably advertising, selling and marketing research.
Marketing Mix
E. Jerome McCarthy suggested the idea of the 4P’s,
which include:
1. Product
2. Price
3. Promotion
4. Place
Marketing Mix
Product
Promotion
Price
Place
Product
Refers to the actual product/service that the
organisation develops. However, the product does
extend to both the tangible aspects such as features,
packaging etc. and the intangible aspects of a product
such as service levels and brand image.
Price
Is the element that generates revenue and therefore a
profit for the organisation. Price will involve the
organisation understanding all its costs (fixed and
variable) and taking into consideration other factors
such as competitor price levels and market positioning
when setting the price of a product/service.
Promotion
is the way an organisation communicates with its
target audience using different elements of the
marketing communications mix such as advertising,
PR, sales promotion etc.
Place
Refers to more than a physical location. It is the way an
organization distributes/delivers its products/services
to its target market.
Place
Place refers to the physical means by which an
organisation delivers its products e.g. via retailers,
directly online etc., but also refers to the way the whole
distribution channel is developed and managed in
terms of coverage required, levels of service needed
and levels of after sales service required.
Value Adding
Added value is the difference between the cost of
acquiring the raw materials and finished goods.
Value added = Sales Revenue - cost of Raw
materials
Value Adding
For example, if I am selling wooden chair.
Cost of wood for one chair=$100
Selling Price of one chair=$250
Added Value= Selling price-Cost of raw material i.e.
($250-$100) =$150 (Value added is NOT the same as
Profit.)
Value Adding
For example, you take a flight from New Delhi to
Mumbai. An economy airline will charge less as
compared to a normal airline. This is because the latter
has added more value to its service by providing better,
more comfortable seats, more leg room, better trained
in-flight attendants etc.
Value Adding
Despite the fact that both these flights are traveling
the same distance and the cost of the fuel will be
almost equal.
Creating Brand Name
Brands represent quality and sometimes status.
Consumers are prepared to pay more for products
which have a strong brand attached to it. Why does a
pair of Nike sell costlier than its counterpart Puma,
though the cost of production may not be much
different.
Advertising
Through advertising the business can create a strong
brand loyalty among its customers and in the process
charge more for its goods or services.
Proving customized services
Business providing better quality personalized services
to their consumers add more value. Consumers are
willing to pay a little extra for customized services
By offering convenience
Consumers love convenience. If you get a product or
service without much effort then you might happily
pay a premium for it. For example, free home delivery
of your weekly grocery.
Job Production Method
Job production involves firms producing items that
meet the specific requirements of the customer. Often
these are one-off, unique items such as those made by
an architect or wedding dressmaker.
Advantages of Job Production Method
The product can be tailored to meet the needs of
the customer (job production gives more flexibility
in this matter than other types)
Multi skilled workers can adapt their skills to carry
out a verity of tasks.
Advantages of Job Production Method
The employees have greater involvement with the
product. The completed job gives greater
satisfaction than contributing to a small part of a
product.
Disadvantages of Job Production Method
Job production requires a multi task workforce. If it is a
sophisticated product, it demands a highly skilled
workforce able to do a wide range of specialized tasks.
This may increase labour costs.
Disadvantages of Job Production Method
The business is likely to need (own or lease) a wide
range of machinery. This also may increase the cost of
production.
Cannot achieve economies of scale as orders are not
likely to be repeated.
Batch Production Method
Batch production occurs when many similar items are
produced together. Each batch goes through one stage
of the production process before moving onto next
stage. Good examples include:
Cricket bat manufacture
Baking / meal preparation
Clothing production
Advantages of Batch Production Method
Each batch can be changed to meet customer
requirements.
Compared with job production, it can lead to a saving
in the amount of machinery used.
Costs of production spread over a number of units, it
reduce the unit cost.
Disadvantages of Batch Production Method
The workers may not motivate as they have to do
repeated task on each batch.
If a batch is too large and one operation takes longer
than another, then staff and machines can stand idle
while they wait for the next batch it reach them.
Flow Production Method
This is the continuous production of uniform,
standardized products for a mass market.
A sub-type of mass production is flow production (line
production). Machines and labour are organized in a
production line where each individual item being
produced moves from one stage of production to the
next immediately
Advantages of Flow Production Method
By using highly mechanized system, it requires only
low skilled labour. It reduces labour costs.
There can be division of labour. The workers specialize
in a task and they become expert of it.
Can achieve economies of scale. The unit cost will be
low.
Disadvantages of Flow Production Method
The product is standardized.
High investment is required because specialized
machinery is used.
Workers may not be motivated by doing the repetitive
work.
Use of Technology in Production (CAD/CAM)
Acronym for computer-aided design/computer-aided
manufacturing, computer systems used to design and
manufacture products. The term CAD/CAM implies
that an engineer can use the system both for designing
a product and for controlling manufacturing
processes.
Use of Technology in Production (CAD/CAM)
For example, once a design has been produced with
the CAD component, the design itself can control the
machines that construct the part.
Source of Finance
Often the hardest part of starting a business is raising
the money to get going. The entrepreneur might have a
great idea and clear idea of how to turn it into a
successful business. However, if sufficient finance
can’t be raised, it is unlikely that the business will get
off the ground.
Source of Finance
Organization can raised finance in two different ways
that is internal & external.
Source of Finance
Organization can raised finance in two different ways
that is internal & external.
Internal Source of Finance
Personal sources These are the most important
sources of finance for a start-up, and we deal with
them in more detail in a later section.
Internal Source of Finance
Retained profits This is the cash that is generated by
the business when it trades profitably – another
important source of finance for any business, large or
small.
External Source of Finance
A bank loan provides a longer-term kind of finance
for a start-up, with the bank stating the fixed period
over which the loan is provided (e.g. 5 years), the rate
of interest and the timing and amount of
repayments. The bank will usually require that the
start-up provide some security for the loan.
External Source of Finance
A bank overdraft is a more short-term kind of
finance which is also widely used by start-ups and
small businesses. An overdraft is really a loan facility –
the bank lets the business “owe it money” when the
bank balance goes below zero, in return for charging a
high rate of interest.
Business Cost
A fixed cost is a cost which is incurred for a particular
period of time and which, within certain activity
levels, is unaffected by changes in the level of
activity.
Eg: Rent
Business Cost
A variable cost is a cost which tends to vary with level
of activity.
Eg: Direct materials, sales commission
Business Cost
Many items of expenditure are part fixed and part
variable and hence are termed as semi fixed or semi
variable costs.
Eg: telephone call charges
Business Cost Total cost comprise of Fixed cost and Variable cost.
Total revenue is the total inflow of the organization.
Profit is the difference between TR – TC.
Contribution is the difference between SP – VC.
BEP = FC / contribution pu.
BEP is point where organization make no profit no
loss.
Definition
HRM is the process of acquiring, training, appraising
and compensating employees, attending to their labor
relations, health and safety and fairness concerns.
Recruitment
• The process by which a job vacancy is identified and
potential employees are notified.
• Main forms of recruitment through advertising in
newspapers, magazines, trade papers and internal
vacancy lists.
Selection
Selection involves the series of steps by which the
candidates are screened for choosing the most suitable
persons for vacant posts.
Selection Process
Preliminary Interview
Selection Test
Employment Interview
Reference and Background Analysis
Motivation “Motivation is result of processes internal or external to the
individual, that arouse enthusiasm and persistence to
pursue a certain course of action.” Graw and Starke
McGregor’s Theory X & Y Theory X
Assumes that workers have little ambition, dislike
work, avoid responsibility, and require close
supervision.
Theory Y
Assumes that workers can exercise self-direction,
desire responsibility, and like to work.
Herzberg’s Motivation Hygiene Theory
Job satisfaction and job dissatisfaction are created
by different factors.
Hygiene factors: extrinsic (environmental)
factors that create job dissatisfaction.
Motivators: intrinsic (psychological) factors that
create job satisfaction.
Communication Process The communications process involves the following
stages:
A Sender - is the communicator or person who has a
message to send. It is important the sender
understands the process of communication and any
barriers to communication when he is planning the
message and the medium he will use.
Communication Process A Message - is the information to be communicated.
It is important that the communicator is clear on the
communication objectives he wishes to achieve, e.g.
informing a customer about a new product so that he
can ensure his message is clear.
Communication Process A Medium - is the mechanism a sender will use to
communicate his message, such as the television or
press. The sender needs to understand the advantages
and disadvantages of each medium and ensure that
the medium is suitable for the message to be
communicated.
Communication Process For example it is not appropriate to use a 30 second
television advertisement to communicate detailed
technical information.
Communication Process An Audience/Receiver - is the receiver of the
message and in marketing terms is known as the
“target audience”. Once the target audience is
identified it is easier to choose an appropriate medium
or method of communication and also to produce an
appropriate message.
Communication Process E.g. if the target audience is children then the right
television channel and timing of the message can be
chosen, e.g. cbeebies children’s channel at 4pm (not
9pm at night) and the message should be simple and
clear enough for them to understand.
Communication Process Feedback - is an important part of the
communication process and one that is often
forgotten. It is important for marketers to know if their
message has been received and understood by their
target market, or if it has generated the required
response, e.g. trial of a new product.
Communication Process Therefore senders need to consider mechanisms for
feedback when developing a message and
communication. An example of how this is done is by
sometimes testing the message or advertisement in
advance on a sample target audience to measure their
response.
Barriers to Communication Unclear objectives - if the objectives of a
communication are unclear it is likely to send
confused and ambiguous messages to the receiver and
therefore it may not elicit the required response. It is
therefore important that communication objectives
are set prior to developing a message or choosing a
medium.
Barriers to Communication Noise - there are many factors, known as noise, which
may interfere with a communication. Noise can refer
to an existing belief that needs to be overcome or even
competitor messages.
Barriers to Communication Lack of credibility - many messages suffers from a
lack of credibility, for example television adverts.
Marketers often use mechanisms such as celebrity
endorsement or public relations activities to add
credibility to their message.
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