Business comp 1

= sub group of a larger market w/ similar sets of charcteristics 

Geographic                     Pyschographic              Demographic 

- location                         -personality                       -age 

-religon                            -lifestyle                            -occupation

 -post code                       -attitudes                           -gender 

-rural/urban                       -opinion                           -family 

-estate/private                   -class 

benefits of market segmentations 

-happy customers, increased loyalty, +ve word of mouth, reduce costs 

Cons of market seg 

-limited customers, could get wrong, expensive, time consuming, needs/wants change 

=process of collecting data about a business' customers', market place and competitiors. 

why? -analsye demand, stage of product life cycle, discover customer needs, understand market structure

primary research- first hand data collected, survey, interviews, focus group, questionnaire, directly relevent, private so competitive advantage, high cost, time consuming, inaccurate

secondary research- previosuly collected info, loyalty cards, census report, online, time and cost effective, easy to accsess, bigger scale, outdated, not directly relevant, bias 

qauntitive data- aim to gather data based on facts, closed questions, not in depth, numerical 

qaulitive data- aim to gather opinions and views, discover attitudes, diffcult interpretation 

market research companies- use them as primary is time consuming, continually gather info, create comprhensive data bases 

= a group of respondants who are selected to be representitives of the target market as a whole 

- the size matters as it needs to be statistically valid. too small? random factors lead to inaccuracy. too big? expensive and time consuming 

random sample - every member of the population has equal chance, very representitive, expensive 

qouta sampe- population is segmented into groups sharing characteristics, cheap, not regarded as represetivive

-large businesses can do larger samples so have an advantage  

Why? -big business have advtange (cartel), maximise profits with no consideration of consumers, know how to manipulate the consumer behaviour to control price. 

Laws passed- 

1)sale and supply of goods act,1994. -goods are fit for purpose and last for reasonable time 

2) consumer credit act, 1974. -controls the way goods can be bought on credit 

3)trade descriptions act, 1998+1972.- criminal offence to give untrue or misleading infomation.

The ombudsmen service- retailers and consumers dispute, complaints not dealt with go here

legisation w/ comp policy- laws in place to limit abuse of power, guilty fined 10% of turnover 

ethical issues- subliminal adverts banned, product placement not allowed on kids tv

Soletraders- single individual run, easy to set up, low start up cost, dont publish accounts, limited capital, limited range of skills, unlimated liability

Partnership-joint ownership, wider range of skills, availabiltiy of capital, shared decision making, reduced pressure, dissolved on death of partner, disagreements, unlimated liability

public limated- limated liability, continue on death, capital raised by shares, increased start up costs, anyone can buy shares so lose control, info in public domain 

private limated- (same as public), legal procedures to set up so high costs, financial info in public domain, invite to buy shares

public sector- anything owned or controlled by gov, supply merit(good but underconsumed) and public(non excludable and non rivalry), for our benefit

private sector- profit seeking individuals, premium price for a better service, gain market share, increase share holder value

co-op: owned and controlled by those who work in it 

=anyone/ group who are affected by or have an interest in a business, they create conflicts of interest

-proft is ulitmatley the most important goal so need to prioritise stake holders 

shareholders- owners of a limated company, want high dividends 

employees- job security, wage, happy workers

customers- satisfy needs, effiecent service qaulity 

local community- employment, regional wealth

government- tax, higher employment

suppliers- fair price, dont have much power

managers- profit, self preservation 

location determined by- 

labour- cost, availabiliy, skills 

costs- rent, planning permission, labour costs 

market and comp- footfall, close proxemity to comp 

infrastructure- access to markets, roads, suppliers, economies of concentraion 

socail reasons- nice area, committed work force

gov influence- grants , incentives, taxation policy

International location 

footloose- business moves from location to another basing themselves where best suits them 

interantional transport cost fallen, set up in lower taxation countrys to inflate profit (transfer costing), lower wages, different law restrictions 

Deciding factors of finance -

amount of funding needed, amount of time needed, what needed for, affordability of repayments, whether personal/business asetts can be used as security 

Retained profit- cheapest, not garunteed, oppurtunity cost, pressure to pay owners 

Sale of assets- stuff no longer required, wont get full value back, machinery 

Working capital- sales, reduce trade credit, collect debts

Bank loan- risky, 3-5 yrs, fixed interest

overdraft- w/draw more, interest calculated daily, bank can ask back at any time 

factoring- turn an invoice to cash,results in savings in administra on costs, which can be substantal, and faster customer payments means lower interest costs on any overdra facility

trade credit- interest free, pay later, difficult to obtain 

leasing- monthly fee, dont own, rent, garuntee works 

share capital- permanent, sell more shares, fast 

hire purchase- lease until last payment 

gov assistance- hard to get, start up schemes, help unemplyment 

sale and lease back- quick capital

commercial mortgage- 10-15 years, predicatble cost, land purchase/building

venture capitilist- skills, invest large amounts, involved in running so may lose control 

variable costs= variable costs per unit x no. of units sold 

total cost= fixed cost + variable cost 

total revenue-total costs= p/l 

breakeven= fixed costs/ contrbution per unit 

contribution per unit= selling price per unit - direct costs 

debtor - owe money 

creditor- u owe money 

liquidity- ability to pay short term debts 

+ves

- simple and easy to use 

-helpful when seeking a loan 

-allows what if

-ves

-assume all output is sold

-assume all sold at same price with same direct costs 

-unlikely to remain valid for long

Reasons for bad cash flow- too many assetts, depressed sales, bad debt, over trading, too much credit 

Resolving cash flow -sell and leaseback, discounts, essential purchases only, chase debtors, factoring company

= A financial plan of action covering a specific amount of time that describes revenues and expected expenditure. Usually objective driven.

Process: 1) establish aims and objectives 2)set functional budgets 3)budget broken down 4)set monitary procedures 5)react to any variance 6)spply knowledge gained

+ves: improved management control, financial control, communication system,limited resources used effectivley, 

-ves: those excluded from process may be demotivated, if inflexible cant react to market changes, overstating budget can lead to lack of control 

zero budgeting= managers start with a clean sheet, having to justify every expenditure made. this improves control, helps with allocation of resources and reduces unnessecary costs 

budgetary control= this is variance analysis. favourable or adverse

=the management process involved in identifying, anticipating and satisfying customer requirements

market orientation- base marketing mix on what the market wants

+ves- flexible to change, effective research, designed for customer needs

-ves- high cost research, constant changes, unpredictable

Product orientaion- base marketing mix on internal strengths

+ves- economies of scale, product development, qaulity, apply production management

-ves- changes not responded to, fashion and taste not accounted for

asset led marketing- based on needs of consumer and internal strenghts

+ves- high qaulity of output, progressive change, maximum return, strengths linked to needs

-ves- high cost, time consuming, harder from small/sole traders  

Niche marketing- need a full understanding of desires and needs, good market research, internet helpful 

product life cyle                           boston matrix 

product portfolio- amount of products, the bigger it is the less risk, helps cash flow, fixed costs spread 

marketing mix in diff contexts :

national markets- consistency, developed, need to be broken down and understood 

local markets- use specific tactics, adapt to local tatses and income 

global markets- promotion as homogenius as possible, pricing may differ to varying income

Global brands: 

-marketing and production can bring economies of scale

-if stratogey barley changes from each country can lower costs and increase profits

When deciding on a place a business need to think of where they sell and what methods to use to distrubute the goods. 

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