Ibrahim Sameer (MBA - Specialized in Finance, B.Com – Specialized in Accounting & Marketing)

Marketing

Market Research

Define market research?

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.

Types of Market Research

Primary Research

Secondary Research

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

Primary Research

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

Secondary Research

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.

Production

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.

Ways of Adding Value

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.

Production Method

Batch Production

Job Production

Flow Production

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.

Financing

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.

Human Resource

Definition

What is Human Resource (HR)?

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

Selection Process

Physical Examination

Job Offer

Employment Contract

Motivation

• Define motivation?

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

Motivation Theories • McGragor Theory

• Herzberg Theory

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.

Herzberg’s Motivation Hygiene Theory

Communication

Definition

Define Communication?

Definition

Communication is a process of passing a message from

one party from another party.

Communication Process

Sender Message Medium Receiver Feedback

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

Noise

Lack of credibility

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.

Q & A