Producers - A producer supplies goods and services. Secondary.
Wholesalers - They sell products in bulks and at smaller prices. Economies of sales to retailers. Can offer advice and transport to retailers. Sell in large quantities which reducers unit cost.
Retailers - Shops that sell goods and services to final customers. Tertiary.
Levels:
Zero Level - no intermediary between producer and the customer. Sells direct to final buyer.
One Level - only one intermediary between producer and customer. E.G. retailer.
Two Level - two intermediaries between producer and customer. E.G Producer -Wholesaler - Retailer - Customer.
Sunday 15 January 2012
Wednesday 11 January 2012
Place
Distribution - It begins with the manufacturer (always the starting point), then to the retailer or wholesaler which are the distributors to the customers, and then finally to the customer where it always ends/
Place is the means by which products and services get from producer to consumer and where they can be assessed by a consumer.
E-commerce = Selling over the internet.
What affect does the internet have over business?
It has a positive affect on businesses as it allows them to promote and sell online, it has 24/7 avaliabilitiy, easier to access and direct postage to homes. However the internet can pose another rival/competitor to other stores.
Place is the means by which products and services get from producer to consumer and where they can be assessed by a consumer.
E-commerce = Selling over the internet.
What affect does the internet have over business?
It has a positive affect on businesses as it allows them to promote and sell online, it has 24/7 avaliabilitiy, easier to access and direct postage to homes. However the internet can pose another rival/competitor to other stores.
Competition
Competition is when you go against someone in order to come out on top of your opponent within a similar category. Businesses compete over customers, product or service, price, location, market share, advertisement, reputation. An example of this is McDonalds who rival against Burger King and KFC.
Tuesday 10 January 2012
Limited & Unlimited liability
Limited liability: When a partner or investor cannot lose more than the amount invested. Therefore the investor or partner is not personally responsible for the debts of the company.
Unlimited liability: This is the opposite of 'limited' liability. Therefore the business is at risk of loosing more than money being invested and their personal possessions can be taken.
Unlimited liability: This is the opposite of 'limited' liability. Therefore the business is at risk of loosing more than money being invested and their personal possessions can be taken.
Sole Trader: Someone who starts up a business on there own. Advantages of a sole trader is being able to be your own boss, make your own descisions and not adapt yourself to suit a partners needs. Disadvantages are it is more stressful with no help, you face unlimited liability and you can struggle with finance.
Partnership: 2 - 20 people running a business together. Advantages of a partnership are having a bigger contribution of skills, ideas and money/finance going into the business. The disadvantages of a partnership are disagreements and arguements, and you can face unlimited liability, as well as being held partly responsible for the partners actions
Public Limited companies: Sell shares to anyone on the stock exchange. Advantages of this is you are getting more investments, more media and more coverage of company. Disadvantages are media could go wrong, flotation is more common.
Private limited companies: Private limited companies only sell shares to friends and family and don't appear on the stock exchange. Advantages of this are you only loose the money you invested and the business continues after death of founder. Disadvantages of this is you have to register.
Franchise: Franchise occurs when a franchisor sells an existing business idea, name and rights to sell their products to franchisee. Advantages are it is already a successful business, you have less of a risk of becoming in debt and you do not have to do as much paperwork and thinking of ideas. Disadvantages of this include that when there is one problem with one franchise it can affect others, and there are many disputes between the franchisee and the franchisor over power. Also you must give a percentage of your profit to the franchisor.
Partnership: 2 - 20 people running a business together. Advantages of a partnership are having a bigger contribution of skills, ideas and money/finance going into the business. The disadvantages of a partnership are disagreements and arguements, and you can face unlimited liability, as well as being held partly responsible for the partners actions
Public Limited companies: Sell shares to anyone on the stock exchange. Advantages of this is you are getting more investments, more media and more coverage of company. Disadvantages are media could go wrong, flotation is more common.
Private limited companies: Private limited companies only sell shares to friends and family and don't appear on the stock exchange. Advantages of this are you only loose the money you invested and the business continues after death of founder. Disadvantages of this is you have to register.
Franchise: Franchise occurs when a franchisor sells an existing business idea, name and rights to sell their products to franchisee. Advantages are it is already a successful business, you have less of a risk of becoming in debt and you do not have to do as much paperwork and thinking of ideas. Disadvantages of this include that when there is one problem with one franchise it can affect others, and there are many disputes between the franchisee and the franchisor over power. Also you must give a percentage of your profit to the franchisor.
Pricing Strategies
Penetration pricing: Setting a low price initially, to attract customers.
Competitive pricing: Setting a price based on what the competitor is charging.
Loss leader: A prodcut sold at a low cost to encourage another products profitable sales.
Cost plus pricing: Calculating the price of producing the product and adding on a percentage of profit.
Price discrimination: Setting a different price for the same product in different areas of a market. A good example of this is cinema tickets for different ages.
Predatory pricing: Agressive pricing to drive out competitors from that market.
Market led pricing: Setting a price based on personal research put together, from the target market.
Price wars: Price reduction based upon competitive rivalry.
Competitive pricing: Setting a price based on what the competitor is charging.
Loss leader: A prodcut sold at a low cost to encourage another products profitable sales.
Cost plus pricing: Calculating the price of producing the product and adding on a percentage of profit.
Price discrimination: Setting a different price for the same product in different areas of a market. A good example of this is cinema tickets for different ages.
Predatory pricing: Agressive pricing to drive out competitors from that market.
Market led pricing: Setting a price based on personal research put together, from the target market.
Price wars: Price reduction based upon competitive rivalry.
Sunday 8 January 2012
4 P's of the Marketing Mix
The Marketing Mix refers to all the activities that can influence whether or not a customer buys a product. We refer to these as the 4 P's - Price, Product, Place, Promotion.
Price - How much the product costs to manufacture and how much the selling price is. A selling price will be higher than the manufacturing price in order to make a profit from the product. Price is also one of the main ways a business will compete with another. Prices are affected by some of the following aspect: demand, competition, buyers, manufacturing price, location, popularity, position in product lifestyle, packaging, quality, design features and more.
Product - The product refers to design the specification and the features of the product. Many business' have a range of products. This means that they manufacture a variety of different products for different purposes or customers.
Place - what is the value of the product to the buyer? What kind of store is the product or service sold in? Refers to how the product gets to the buyer; for instance, point-of-sale assignment or retailing. This third P has furthermore at times been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which division (young adults, families, business citizens), etc. also referring to how the surroundings in which the product is sold in can influence sales.
Promotion - This includes advertising, sales promotion, including promotional education, publicity, and individual selling. Branding refers to the assorted strategies of promoting the product, brand, or company.
Price - How much the product costs to manufacture and how much the selling price is. A selling price will be higher than the manufacturing price in order to make a profit from the product. Price is also one of the main ways a business will compete with another. Prices are affected by some of the following aspect: demand, competition, buyers, manufacturing price, location, popularity, position in product lifestyle, packaging, quality, design features and more.
Product - The product refers to design the specification and the features of the product. Many business' have a range of products. This means that they manufacture a variety of different products for different purposes or customers.
Place - what is the value of the product to the buyer? What kind of store is the product or service sold in? Refers to how the product gets to the buyer; for instance, point-of-sale assignment or retailing. This third P has furthermore at times been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which division (young adults, families, business citizens), etc. also referring to how the surroundings in which the product is sold in can influence sales.
Promotion - This includes advertising, sales promotion, including promotional education, publicity, and individual selling. Branding refers to the assorted strategies of promoting the product, brand, or company.
Boston Matrix
When products have sale, they are put into 4 categories called the Boston Matrix.
- Dogs
- Cash Cow
- Star
- Question Mark
Dogs- have a low share of a low growth market. Not doing well in a particular market. The product is not much use to the business so the business should either get rid of or improve it.
Cash Cow - Doing well in a market and have a high share of the market. However the market is not growing so fast. Cash Cows are good news for business'. Heavily produced in the past, firm earns revenue from it.
Star - Big share in fast selling market. Doing well in a attractive market; however the company will need too keep upgrading and promoting the star to help growth and sales with the aim to turn it into a cash cow.
Question Mark - a.k.a: oil rigs or problem child. These have a small share in a fast growing market. Firms will not know whether the product will fail or succeed; should spend money on promoting and upgrading.
Product Life Cycle; Product Extension Strategies and their importance.
Product Life Cycle is the stages a product will go through in its life time; from development to decline the product faces a lot of challenges in it's time to become of high demand for the very unsettled public.
Development:the idea of the product is firstly brought up and developed; in this stage a prototype is build to give a brief understanding of what the product id going to be like.
Introduction: when the product is foremost launched into the selling market. Business' need to convince distributors to sell their products.
Growth: where the products sales will start getting faster and the product will be sold in bigger quantities because it might have good feedback from launch and the advertisement may be successful.
Maturity: Sales slow down because the product could be getting old and outdated or a competitor could have launched a better product similar to yours forcing the public to turn to the new product.
Decline: Sales fall. Business need to decide whether to make a new product, upgrade the old one, product extension strategies or take the product fully of the market.
Product Extension Strategies: These are strategies that are introduced to extended the life time of the product, and to help the product from the decline stage.
Examples of these are: > Attempting to find new customers
> Encouraging people to buy the product more frequently.
> Increased funding for advertisement
> Cut price for product - better value for money.
Product extension strageties are important because it helps the product life cycle go on for longer, helping the business whom founded the product earn more money rom the product and in some cases - help the company not to go bust.
Development:the idea of the product is firstly brought up and developed; in this stage a prototype is build to give a brief understanding of what the product id going to be like.
Introduction: when the product is foremost launched into the selling market. Business' need to convince distributors to sell their products.
Growth: where the products sales will start getting faster and the product will be sold in bigger quantities because it might have good feedback from launch and the advertisement may be successful.
Maturity: Sales slow down because the product could be getting old and outdated or a competitor could have launched a better product similar to yours forcing the public to turn to the new product.
Decline: Sales fall. Business need to decide whether to make a new product, upgrade the old one, product extension strategies or take the product fully of the market.
Product Extension Strategies: These are strategies that are introduced to extended the life time of the product, and to help the product from the decline stage.
Examples of these are: > Attempting to find new customers
> Encouraging people to buy the product more frequently.
> Increased funding for advertisement
> Cut price for product - better value for money.
Product extension strageties are important because it helps the product life cycle go on for longer, helping the business whom founded the product earn more money rom the product and in some cases - help the company not to go bust.
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