1. Review for Final

2. Marketing

3. Role of Marketing
•Identify customer needs
•Satisfy customer needs
•Maintain customer loyalty
•Gain information on customers
•Anticipate changes in customer needs
•A mass market is
–where there is a very large number of sales of a product.
•Niche market is
–a small, usually specialised, segment of a much larger
market

4. Market segmentation
• Divide the market into smaller, more specific groups (age, gender,
lifestyle, wealth)
• Customers in these groups will have similar needs and
characteristics
• Advantages:
• Advertising is directed towards the right consumers so cost
effective (don’t waste money advertising to the wrong customers)
• Cost effective marketing means higher sales and profits
• Can identify a segment which has needs that are not met =
opportunity
Disadvantage:
higher advertising costs as need a different advertising campaigns
for each segment

5. Market Research
•Market research is
–the process of gathering, analysing and interpreting
information about a market

6. Market Research Data
Primary
a) Questionnaires
b) Interviews
c) Focus Groups
d) Observation…
Secondary
a) Government stats.
b) Newspapers
c) Internet

7. Types of Product
Consumers goods
Consumer services
Producer goods
Producer services

8. Successful product
•Satisfies needs
•Provides Added Value
•Distinctive/different USP
•Not too expensive to produce

9. Types of pricing
•Cost-plus pricing
•Competitive pricing
•Psychological pricing
•Penetration pricing
•Price skimming
•Promotional pricing
•Dynamic pricing

10. Sales promotion
Price reductions
Gifts
BOGOF
Competitions
Point-of-sale displays >>
After-sales service
Free samples

11. Distribution channel 1
Producer Consumer

12. Distribution channel 2
Producer Retailer Consumer

13. Distribution channel 3
Producer Wholesalers Retailer Consumer

14. Distribution channel 4
Producer – agent – Wholesalers - Retailer -
Consumer

15. Methods of distribution
•Department stores
•Chain stores
•Discount stores
•Superstores
•Supermarkets
•Direct sales
•Internet (e-commerce)

16. Marketing strategy
Definition: a plan to combine the four P’s to
achieve an objective
E.g. Objective: increase sales in a niche market
Product: hand made suits
Price: Psychological Pricing
Place: luxury retailers
Promotion: After sales service

17. Motivating workers
• Financial Rewards
• Non-Financial Rewards

18. Financial rewards
•Wages
•Time rate
•Piece rate
•Salaries
•Commission
•Profit sharing
•Bonus
•Shares

19. Non-financial (fringe benefits)
Company car
Discounts on products
Healthcare
Education
Expenses
Pension

20. Business activity and Stakeholder
Objectives

21. Economic problem
There are unlimited wants but limited resources to
make goods to satisfy our wants. There’s scarcity.
Why? There are not enough factors of production
•Land
•Labour
•Capital
•Enterprise

22. Opportunity cost
The next best alternative given up by choosing
Holiday or car?
Machine A or machine B?
New road or new school?

23. Specialisation
When people and businesses concentrate on
what they are good at.
How?
Division of labour: when the production process
is split into different tasks.

24. Business activity
Combine scarce resources to make products to
satisfy people’s wants.
Attempt to add value
The difference between the selling price and the
cost of bought in materials.

25. Increasing added value
Increase the price
Reduce the cost of the materials

26. Business Objectives
Business survival
Profit
Returns to shareholders
Growth of the business
Market share increase
Service to the community

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+ Value

29. Stakeholders
Any person or group with a direct interest in the
activities of the business

30. Different Stakeholders
Owners
Workers
Managers
Government
Community
Bank
Consumers

31. Case Example
• Vietnam resort town (Dalat) concerned nuclear reactor could hit tourism.
Monday, March 31, 2014 11:48 (Thanh Nien News)

32. Stakeholder Objectives
Owners/Investors: dividend, growth, increased value
Workers: regular pay, security, satisfaction
Managers: high salary, security, growth
Customers: safe product, value, reliability
Government: Development, tax, jobs, rule of law
Community: jobs, environmentally friendly, safe
products
Bank: interest paid back, liquidity
Consumers: Good Product, Low Price

33. Stakeholder conflict
•All stakeholders have different objectives,
inevitably, there is conflict.
•It is no longer enough to follow the law.
Businesses increasingly have be more sensitive to
the needs of all stakeholders.
•(i.e. Nike, http://www.businessinsider.com/how-nike-solved-
its-sweatshop-problem-2013-5)

34. Public Sector Objectives
•Financial – meet govt. targets
•Service to public
•Social – create jobs

35. Production and costs

36. Costs
Fixed costs (don’t vary with output)
(sometimes called overhead)
Variable costs (Vary with output)
Total costs = (FC + VC)
Average cost per unit = (total cost/total output)

37. Break-even (no profit/no loss)

38. Case Example
Truc’s Tra Sua Truck

39. Case Example
Truc’s Tra Sua Truck
Fixed Costs = $3000
Variable Costs per unit = $1
Selling Price = $2
What would profits be if actual sales at 5,000 units?
New B-E point if selling price increased to $2.50?

40. Case Example
0
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0 1000 2000 3000 4000 5000 6000 7000 8000
Dollars($)
Units
Truc's Tra Sua Truck

41. Contribution
Selling price – variable cost = contribution
Break even output = fixed costs/ contribution

43. Production Vs. Productivity
Production: the level of output
Productivity: output/input
Units Produced/Number of Employees
Units Produced/Number of Machines
A measure of efficiency

44. Increasing productivity
•Improve quality control
•Less waste
•Use machines
•Motivate
•Train
•Technology
•Good inventory control

45. Efficiency benefits
Increased Productivity (outputs to inputs)
Lower costs per unit
Better Quality
Higher Profits

46. Lean production
Techniques to decrease waste and improve
efficiency
•Lowers costs
•Decreases waste
•Lower prices
•Decrease Inventory

47. Kaizen
Continuous improvement through the
elimination of waste.
• Flow of products and materials
• Workers motions
• Processes
• Everybody!!

48. Just in Time theory
•Reducing or eliminating inventories
•No Waiting (materials, process, or people)
•Supplies arrive just when they are needed

49. Methods of production
Job production (made to order, 1)
Batch production (made in groups)
Flow production (continuous production, mass)

50. Technology in production
Automation (computer control)
Mechanisation (machines operated by people)
CAD (computer aided design)

51. Economies of Scale
Purchasing economies (buying in bulk)
Financial economies (cheaper interest)
Managerial economies (best managers)
Technical economies (large machines/ best tech)

52. Diseconomies of Scale
Poor communication
Less motivated as large company
Slow decisions

53. Finance

54. Sources of finance
•Owners savings
•Retained profit
•Bank loans
•Overdraft
•Issue of shares
•Selling debentures
•Trade credit
•Factoring of debts
•Sale of assets
•Sale of inventory
•Grants

55. Cash flow
The movement of money in and out of a business
Inflows – money in
Outflows – money out
Forecast is an estimate of future inflows and
outflows

56. Only show cash, no credit

57. Income statements
Records income and costs. Shows profit.

58. Balance sheet
Shows the value of the businesses assets and
liabilities.

59. Balance Sheet

60. Balance sheets
Working capital = current assets – current
liabilities.
Capital employed = shareholders funds + non-
current liabilities

61. Profitability Ratios
Return on equity = net profit/sales revenue
(how much profit for investment)
Gross profit margin = gross profit/revenue x100
(how much gross profit on sales)
Net profit margin = net profit/revenue x 100
(how much net profit on sales)

62. Liquidity Ratios
Current ratio = current assets/current liabilities
(shows the ability to pay off short term debts with
current assets)
Liquid ratio = current assets – inventories/current
liabilities
(shows the ability to pay off short term debts with
cash and debtors cash)

63. Users/uses of accounts and ratios
Managers use them for taking decisions
Shareholders, banks and other creditors use them to
check on company performance
Government use them to calculate tax
Managers use them for controlling the operations of a
business
Other companies use them for comparing performance.