Unit 2 - Management of marketing and operations Flashcards
What is marketing?
Involves trying to meet the needs and wants of cutomers by finding out what they want
page 50
Different kinds of markets
- On a website
- In a shop
- Over the phone
- Through an internet-enabled telephone or tablet computer
page 51
Why is marketing important?
- Can attract new customers
- Can allow the business to enter new markets
- Helps the business grow
- Increases the profit a business makes
page 51
The role of marketing
Can help a business increase the number of customers buying from the business (Market Growth)
page 52
Market segments
- gender
- age
- occupation
- religous/cultural belief
- Income
- geographical location
- lifestlye
page 53
The marketing mix
The four P’s
- Product
- price
- place
- promotion
page 55
Product development
- Market research
- ideas for the product created
- A prototype is made
- Test marketing
- Potential changes made
- Method of production decided
- Price decided
- Place of selling decided
- method of promotion decided
page 58
Branding
Can be a logo, name or symble given to a group or type of product
page 61
Pros of having a brand
- Recognisable for customers
- Encourages brand loyalty
- Higher prices may be charged
- Easier to introduce new products
page 61
Cons of having a brand
- If a product is poor, it damages the whole brand
- Some people try to copy brands
- Can be time consuming and expensive to establish
page 62
Factors affecting pricing
- Life cycle of the product
- Price charged by competitors
- Cost of production
- How much profit is wanted
- How much of the product can be supplied
- Market segment
page 62 - in depth descriptions on page 63
Pricing strategies
- Low price
- High price
- Promotional pricing
- Cost-plus pricing
- Psycological pricing
page 64
Factors affecting placement
- where the customer is
- Availability of suitable premises
- Parking facilies
- suitable infastructure
- governemt incentives and grants
- the market segment
- employee availability
- competition
- environmental impact
page 65
Distribution methods
- Cars/road vehicles
- train
- aircraft
- boat
Page 67
Pros of car distribution
- Often cheapest method
- Quicker
- Product recieved at door
page 64
Cons of car distribution
- Difficult to transport large products
- Not environmentally friendly
- Roadworks can cause delays
page 64
Pros of train
- Large products are easy to transport
- Large quantities can be transported
page 64
Cons of train
- There is not a train station in every location
- Not a door-to-door service
page 64
Pros of aircraft
- Products can be transproted around the world quicker than sea
- Large amounts of small products can be transported
Cons of aircraft
- large items cannot be transported
- products need to be taken to the airport to be loaded onto the aircraft - can be expensive
- Not a door-to-door service
Pros of boat
- Larger products can be transported
- Products can be transported across the world
Cons of the boat
- It is time consuming for international delivery
- Not a door-to-door service
Types of advertising
- Internet websites
- Quick response codes (QR)
- E-commerce
Pros of E-commerce
- Customers can be targeted worldwide
- Can buy online 24/7 from wherever
- Online discounts can be given
- Product information can be updated quickly
- Stock avalibility can be checked instantly
- Environmentally friendly
Cons of E-commerce
- Goods cannot be seen or handled before purchase
- Customers may not wish to disclose personal information online
- No personal contact with organisation
- Employees need training to maintain and update the website
- Can be expensive to make and maintain a website
Pros of Apps
- Can be used on the move
- Can often access free wifi to access internet
Cons of apps
- People need to buy a smartphone, computer ect which is expensive
- Training is needed to design the app
- Internet connection depends on your location
Pros of text messaging
SMS
- Customer receives the message instantly and directly
- lots of customers can be targeted
- Cheaper than other forms of advertising
Cons of text messaging
- Can only include a small amount of text
- Customers may recieve lots of texts and feel annoyed/fustrated
- Need to have the phone number of the customer
Pros of email advertising
- An e-mail can be sent any time
- Documents and files can be attached
- Email can be sent worldwide instantly at little cost
- environmentally friendly
Cons of email advertising
- viruses can be spread
- Emails can fustrate or annoy the customer
- Some emails may be filtered into the spam bin
- employees may need training
Pros of TV advertising
- Large audiences can be reached
- Adverts can be targeted towrads specific segments
- The product can be shown from different angles
- Demonstrations can be given
Cons of TV advertising
- The cost of advertising nationally on TV can be high
- People might not watch adverts - Modern tech means that people skip ads
- Ads are usually quite short, might not have time to take in all the information given
Pros in newspaper adverts
- The specific location of the customer can be targeted
- Adverts can be kept by readers for reference later
- Lots of informatin can be communicated
- A free sample of the product can be given
Cons of newspaper advertising
- Not all newspapers are in colour
- No sound or video demonstrations can be given
- Some specialist newspapers can be expensive to buy and place adverts in
Pros of radio and media advertising
- Free advertising if the report is positive
- National media reports can reach large audiences
- Local radio stations can reach people locally
cons of radio and media advertising
- Not all media reports are positive - they also tell people about the negative impact of business
- The whole situation might not be reported by the media; facts might be missed out or be misleading
Promotion methods
- Special offers
- Free samples
- Celebrity endorsement
- Ethical marketing
Special offers
Providing a discount when a product is bought, encourages people to buy a product and return to the business
Free samples
A ‘taster’ of the product. Allowes people to try the product without buying it
Costs the business to provide the samples and people may not buy them
Pros of Celebrity endorsement
- Customers are attracted to a product because it is associated with a celebrity
- Higher prices can be charges as the prduct is seen as exclusive to a celebrity
- Money can be saved on marketing if the celebrity is well known
Cons of celebrity endorsment
- Not everyone will like a particular celebrity
- THe companys reputation could be damaged if the celebrity gets a bad name
- Getting a celebrity to endorse a product can be expensive
Ethical marketing
- Cutting down on the volume of paper used (fewer posters ect.)
- Not being misleading in the way it presents information in its adverts
- COmplying with discrimination laws and good business practice in its adverts
- Ensuring its marketing activites do not offend beliefs that different people may have
Market research
Used to find out what customers want and what competitors are doing
* make sure they are providing the goods and services people want
* To make sure they’re ahead of competition
Pros of field research
- The research is more up-to-date than the previous existing information
- The information has been gathered for a specific prupose and is therefore more relevent to the business needs
Cons of field research
- Can be expensive to carry out
- can take a long time to carry out - time is money
- People need to betrained in carrying out field research which can be expensive
Pros of desk research
- Easy to obtain as the research as already been conducted
- Usually cheaper to gather then field research - saving money
- Decisions can be made quickly because the information already exists
Cons of desk research
- Research carried out for a different reason - information less reliable
- Information may not be up to date
- Information may have been biased - wrong decisions made
Methods of field research
- personal interview
- focus group
- Postal survey
- Telephone survey
- Online survey
- Hall test
- Observation
- electronic point of sale (EPoS)
- Social networking site
Pros of Personal interview
- The interview can encourage the respondant to answer questions
- the interviewer can ask the person they’re interviewing to clarify a point
- Body language and facial expressions can be observed
Cons of a personal interview
- It is time consuming and expensive to carry out
- The interviewer will need training in interview skills
- Fewer responses than a survey
Pros of focus group
- The feelings and views of people can be observed
- Points can be clarified
- Body language can be viewed
Cons of focus group
- Time consuming and expensive
- Information can be difficult to analyse
- The sample of people used may not reflect the sentiments of the whole population
Pros of postal survey
- Cheap to send the survey to large amounts of people and globally
- People can complete the survey at their own pace at a time that suits them
Cons of postal survey
- People need to open the mail to send it back; may not do this
- Can take time to get the information back
- No opportunity for the respondant to clarify info
- Survey has to be designed carefully so info is not misinterpreted
Pros of telephone survey
- Large amounts of people all over the country can be contacted
- Less expensive to carry out than a personal interview
- INformation is obtained instantly
- Points can be clarified
Cons of telephone survey
- People might not want to participate in a telephone survey
- unstuitable for large surveys as people are often only willing to answer a short survey
Pros of online survey
- A link to the survey website can be sent to large numbers of people
- Do not need to spend money of printing surveys
- People from all over the world can participate
Cons of online survey
- Relies on people having a connection to the internet
- No personal contact
Pros of hall test
- product is tried by the participant, how can report back their actual experience
- inexpensive to carry out
cons of hall test
- Opinons and views can be difficult to analyse
- The participent may not say how they really feel as to not appear as rude
pros of observation
- Facts and figures are gathered, which are easier to analyse than opinons
- People being observed might not be aware so they should act naturally
Cons of observation
- Those being observed are not usually asked for their opinon or to give an explanation as to why they did or did not do something
- There are privacy and ethical issues to consider when observing people
Pros of Electronic point of sale
(EPOS)
- Large quantities of information can be gathered
- the information gathered is factual and not just opinons
cons of electronic point of sale
- It can be expensive to purcahse and EPOS system - especcial for a small business
- No opportunity to gain the opinon of the customer
Cost of raw materials
The price charged by a supplier to purchase raw materials
Costs need to be kept as low as possible to make a profit
Low Costs will improve the cash flow of a business
Quality of raw materials
How good the raw materials are
Without high quality raw materialsm the finished product will not be of a high quality
Low quality raw materials will probably result in higher wastage
Lead time
How long it will take to recieve the raw materials from when an order is placed
Some raw materials need to be used quickly or they might go off
Without raw materials being delivered on time, production might have to stop, which is costly
Quantity of raw materials
How many raw materials are required
THere need to be enough raw materials avaliable to allow production to continue, however, not too much otherwise this can be expensive for storage
Correct quantites of raw materials are required to satisfy customer demand
location of supplier
Where the supplier is located
The further away the supplier is, the longer the raw materials will take to be delivered
The cost of transporting products has to be considered
Reliability and reputation of supplier
reliability - Will the supplier deliver when they say they will?
Reputation - What people think of the supplier
IF the supplier does not deliver on time, thism ihgt cause production to stop and cusotmers might not het their order on time.
Suppliers with a good reputation are likely to bet more business compared to one that has a reputation
Storage space avalible
How much space the business has in a warehouse to hold the raw materials until they are needed
Raw materials might be wated if they cannot be stored in the correct place
Storage costs can be expensive
Inventory management
Stock includes:
Raw materials from suppliers
Prodcuts that are currently being made
Products that are finished being made
Consequences of having too little stock
- Production might stop if there are not enough materials
- customers mihgt not receive theri orders on time
- Unexpected orders cannot be met
Consequences of having too much stock
- It costs money to store stock
- Stock has a higher risk of being stolen
- Stock has a higher risk of going out of date
- Money is tied up in stock that could be used for other purposes
- If social factors change the stock might be wasted
Deciding factors in what method of production to use
- The actual product being made
- THe quantity of the prduct that needs to be made
- the way the business will make sure the product is of a high quality
- the way stock is managed
- the resources avaliable
Job production
When one product is made from start to finish before another one is made. Usually results in a one off product being made
Pros of job production
- The customer gets exactly what they want and this can increase their satisfaciron
- High prices can ften be charges because a unique product is being made
- Designs can be changed to suit each customers own requirements
Cons of job production
- Specialist tools and equipment mihgt be needed, which can be expensive to buy
- Can’t always buy raw materials in bulk and might miss out on cost savings from bulk buying
- Can take a long time to make a unique product and this might mean the employee loses motivaotin
Batch production
When a gourp of identical proucts are made at any one time. All products in the batch move onto the next stage of production at the same time. Machienery is used
Pros of batch production
- Batches can be changed to suit the requierements of the cusomter, which results in higher customer satisfaction
- Raw materical can be bought in bulk, therefore saving money
- no need for highly skilled workers, so cotsts are kept down
Cons of batch production
- Equipment and employees might nt have anything to do between batches, which costs money
- Many mistakes in one tiem can result in the whole batch being wasted, which costs money and wastes time
- The cost of wach item might be high if the batch size is small so the price charges to the customer might be higher
Flow production
Parts are added to the product as it goes along the production line - Uses machinery
Every product is the same
Pros of flow production
- Large amounts of identical products are made
- Raw materials can be bought in bulk, saving money
- Machinery can work 24/7
Cons of flow production
- The individual customer’s requirements cannot be met because each product is indentical
- If a fault occurs during production this can cause the whole production line to stop
- Large demand for products is needed because hey are made in large quantities
Pros of labour intensive
- Employees can be creative and use their own initiative
- Labour is usually readily avaliable
- No need to purchase expensive equipment
- One-off and unique products can be made easily
Cons of labour intentive
- It is expensive and takes time to recruit, selcet and train new employees
- Employees require specialist skills, which can take time to learn and ay have to undertake training
- The quality of the work can be inconsistant
Pros of capital intensive
- Machinery can work 24/7
- The product being made is of a standerised quality
- Employees require fewer skills to work machinery compared to labour intensive production
Cons of labour intensive
- Expensive to buy machines and equipment
- Individual customer requirements cannot be met
- Breakdowns can e expensive and cause production to stop
Advantages of supplying a high quality product
- Customers are more likely to make repeat purchases
- A good reputationo is gained, which will encourage new customers
- Customers are less likely to buy from a competitor
- Profit and sales can be maximised
- The market share of the business will grow
- Wastage will be minimised, which elps protect the environment
- Easier to recruit staff to work in a business with a good reputation
Methods of ensuring quality
- Use high quality raw materials
- Make sure employees have the required skills and recruiting the best employees
- Maintaining machinery/technology
- Use quality control
- use quality assurance
- Use quality management
Pros and cons of using high quality raw materials
Pro:
Ensures only the best possible inputs are used
Cons:
Might cost more for quality raw materials
Requires a reliable and reputable supplier
Pros and Cons of proper staffing
Pros:
Fewer errors will be made as employees will knnow what theyre doing
Accidents are less likely to happen
Cons:
Time ocnsuming to train emplyees - might involve time away from their job
Can be expensive to provide training
Pros and cons of maintainng equipment
Pros:
Any faults can be discovered before they become a bigger problem
Cons:
Checking equipment can be expensive
Production might have to stop as its being checked
Might involve the use of a specialist company
Pros and cons of quality control
Pros:
Less time consuming than quality management
Cons:
Erros are only discovered at the end of the produciton process - wasteage could be high
Pros and cons of quality assurance
Pros:
Errors in production can be spotted quickly
Cons:
More expensive to check for errors during produciton compared to just the end
Pros and Cons of quality management
Pros:
Product constantly checked to minimise wastage
More thorough than quality control
employees work together on ensuring quality - good for teamwork and motivaiton
Cons:
requires commitment from everyone in the business
Quality policies and procedures need to be implemented and strictly followed
Ways to be socially responsible
- Minimise wastage
- Recycle as much as possible
- Try to minimise packaging
- Prevent pollution
Benefits of being ethical
- They can gain a good reputation and possible recongnition
- wastage costs can be produced
- Products that are seen as ‘ethically produced’ can be charged as a higher price
- They can have a competitive advantage over other businesses
Cons of being ethical
- It can be expensive to purchase environmentally friendly materials and fuel
- Suppliers of ethically produced raw materials may charge more
- Training on appropriate waste disposal methods might be expensive
