Bs unit 3 section 1 of 6

EDEXCELAS Business Studies

REVISION

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 StudiesUnit 2

Section 1Marketing 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 objectives

External 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.


Product

Prom-otion

PlacePrice

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



A portfolio of products or simply put, a group of products can be analysed using the Boston Matrix. This matrix categorises the range of products that the business has into one of four different types, Stars, Problem child or question mark, Cash cow and question mark.

This classification is done based on two criteria ie. Market share and market growth.



• 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?



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



Question marks are products with low market share operating in high growth markets. These are typically new products in the market. Therefore, would have low mkt share togetherwith a high potential for growth.. This suggests that they may need substantial investment to grow market share at the expense of larger competitors. Management have to think hard about “Question Marks” - which ones should they invest in to help grow? Which ones should they allow to fail or shrink?



Cash cows are low-growth products with a high market share. These are mature, successful products, thus have a high mkt sh 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.



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 strategiesThese 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 elastic Revenue remains constant

Revenue remains constant

Demand inelastic Revenue rises Revenue falls


Marketing Mix* Place *


Good LuckHope 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


For more details and revision materialcontact:

Bs unit 3 section 1 of 6

Education

business studies unit

marketing strategy

marketing mix product

marketing mixthe marketing

niche marketing

marketing department

role of marketing

marketing plan