Bs unit 3 section 3 of 6

EDEXCEL

AS Business StudiesREVIS ION

by Apsara Sumanasiri

Scholar Virtual AcademyAddress : No 03, Daisy Villa Avenue,

Bambalapitiya, Colombo 04Tel : (94 11) 2553466 / 2593571Email : [email protected] : www.international-scholar.com

© 2013 by Apsara Sumanasiri. All rights reserved. | Edexcel AS Business Studies Unit 2 Revision on Scholar Virtual Academy

AS Business Studies

Unit 2

Section 1

Marketing Plan


Marketing objectives

& Strategy


What is marketing?

Marketing is the management process

that is responsible for

identifying, anticipating and satisfying

customer requirements profitably


What is marketing?

Customer is KING!

If firms want to survive, they must satisfy

consumer wants.


The role of marketing

The main purpose of marketing is to

increase customer demand, i.e. to shift

the demand curve outwards.


The role of marketing

The marketing department does not

work in isolation.

The objectives of the marketing

department must fit in with the

objectives of the business.


Marketing objectives

Possible marketing objectives could be:

• To increase sales

• To create brand loyalty

• To develop the product range

• To survive in the market

• To change the market position

• To increase Market Share


What determines marketing

objectivesExternal factors:

• Customer behaviour

• Competitor

behaviour

• The economy

• Technology

• Government

• Changes in the law

• Suppliers

Internal factors:

• Market Research Findings

• Forecasted Sales

• Forecasted Profits

• Availability of

Finance


Forming a marketing strategy

A marketing strategy is designed to

achieve the marketing objectives.

The marketing strategy should consider:

• The target market

• The marketing mix

• The strategy of the business


Mass Vs. Niche Marketing

A niche market:

• Targets a very small

segment of a

market

• Sales will be lower,

but prices will be

higher

A mass market:

• Appeals to the

whole market

• Requires high sales

volume and low

prices


The marketing mix

The marketing mix

in said to consist of

the 4 key elements

needed for

successful

marketing, often

referred to as the

4 Ps.


Marketing Mix

* Product *


The marketing Mix - Product

Developing new products is time

consuming and businesses will want to

protect their new products and ideas

(intellectual property). This can be done

through:

• Patents

• Copyrights

• Trademarks


Product Life Cycle


Product Life Cycle


Product Life Cycle


Managing a product portfolio

A product portfolio refers to a range of products produced by a

company or brand.

A portfolio can be managed using a product life cycle approach


How useful is the product life

cycle?The product lifecycle is important to find the approach on the other factors of the marketing mix, however:

• It’s impossible to tell how long a product is going to last and therefore identify where on the PLC the product is.

• It’s of little use to tertiary sector businesses

• Less effective for firms with a large product portfolio (eg. NOKIA)

• It only considers sales and profits


Boston Consultancy Group

Matrix



Matrix

A portfolio of products or simply put, agroup of products can be analysed usingthe Boston Matrix. This matrix categorisesthe range of products that the business hasinto one of four different types, Stars,Problem child or question mark, Cash cowand question mark.

This classification is done based on twocriteria ie. Market share and marketgrowth.



Matrix

• Market share – refers to the proportion

of the total industry sales that a

particular product hold and thus looks

at whther the product being sold has a

low or high market share?

• Market growth – looks at whether the

numbers of potential customers in the

market growing or not?



Matrix

Stars are high growth products

competing in markets where they are

strong compared with the competition.

Often Stars need heavy investment in

order to sustain the market share during

growth. Eventually growth will slow and,

assuming they keep their market share,

Stars will become Cash Cows



Matrix

Question marks are products with lowmarket share operating in high growthmarkets. These are typically new productsin the market. Therefore, would have lowmkt share togetherwith a high potential forgrowth.. This suggests that they may needsubstantial investment to grow marketshare at the expense of larger competitors.Management have to think hard about“Question Marks” - which ones should theyinvest in to help grow? Which ones shouldthey allow to fail or shrink?



Matrix

Cash cows are low-growth products with a high market share. These are mature, successful products, thus have a high mktsh together with less growth potential due to the products maturity in the mkt and thus low potential to grow any futher.. these products need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs. Thus, re-investment is very important.



Matrix

Unsurprisingly, the term “dogs” refers to

products that have a low market share

in unattractive, low-growth markets.

Dogs may generate enough cash to

break-even, but they are rarely, if ever,

worth investing in. Dogs are usually sold

or closed.


Marketing Mix

* Price *


Influences on price

• Demand and supply

• Market conditions

• Production costs

• Market structure

• Taxes and subsidies

• Business Objectives

• Marketing mix


Pricing strategies

Short-term pricing strategies

These are often used for promotional reasons

• Penetration pricing

• Market skimming

• Discounts/Sales

• Loss leader


Pricing strategies

Long-term pricing strategies

• Demand-based

• Cost-based

• Competitor-based

• Psychological


Price Elasticity of Demand

PED shows the responsiveness of

quantity demanded to a change in

price. It can be calculated as:


Price Elasticity of Demand

PED is always negative, due to the inverse relationship between price and quantity demanded. Once the negative sign is

ignored there are three possible outcomes:


PED and total revenue

Price increase Price decrease

Demand elastic Revenue falls Revenue rises

Unit elasticRevenue remains

constant

Revenue remains

constant

Demand inelastic Revenue rises Revenue falls


Marketing Mix

* Place *


Good Luck

Hope you’re doing some effective revision…

Happy Revising!

Apsara


Scholar Virtual AcademyAddress : No 03, Daisy Villa Avenue, Bambalapitiya, Colombo 04Tel : (94 11) 2553466 / 2593571Email : [email protected] : www.international-scholar.com


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Bs unit 3 section 3 of 6