Primary Tasks Involved in Running a...
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Primary Tasks Involved in Running a Business
- Marketing and Advertising
- Production
- Management and Human Resources
- Financial Planning and Analysis
- Legal Issues and Responsibilities
SCO 2.2
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Marketing
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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
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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.
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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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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
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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
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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”
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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
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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
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Price
The price of your product or service tells the customer a lot
about your product
$550 $1550
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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
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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 3rd party
–What retailers are the best for reaching your Target
Market?
– Example: Selling protein powder – where do I sell?
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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
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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...
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Promotion
BuzzSales
AdvertisingPublic Relations
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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
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Air Canada
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The GAP
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Nike
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Pepsi
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Tim Horton’s
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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)
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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 Colasales or any other company’s sales is called marketshare.
Market share is expressed in terms of %’s.
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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.
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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
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Market SegmentMarket 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, DietPepsi; and
3. The energy drink segment such as Red Bull.
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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?
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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.
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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.
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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
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Age Demographics
Age often defines our tastes, needs, and our wants.
Examples:
Teenagers want…..
Adults are interested in….
Seniors are interested in ….
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Age DemographicsGatekeepers
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.
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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.
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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….
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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.
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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.
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Ethnicity and Culture Demographics
Canada’s diverse population brings with it diverse interests, wants and needs.
Examples:
Restaurants targeting variouscultural food tastes
Newspapers and magazines are
available in over 100 languagesin Canada.
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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…