A-Level Business Studies: Managing a Business

Using the Marketing Mix and Promotion Promotion is how a business makes consumers aware of its products. It’s used to attract consumers to buy the product thereby creating sales revenue. Promotion is either:- ‘Above the line’: this refers to extensive promotional campaigns through the national media.- ‘Below the line’: this refers to more short-term tactics, like direct mail or personal selling. Most businesses opt for both kinds of tactics in order to optimise their consumer impact.

AdvertisingThis is the most expensive type of promotion. It can take place through a number of mediums:- Television- Cinema- Radio- Posters- Newspapers- Magazines- The InternetAdvertising allows businesses to reach a wider audience and thereby have a greater impact. Advertisements tend to come under three types: Informative advertisements: they let consumers know that the product is available and provide information on its characteristics, how it works and its purpose. Persuasive advertisements: they attempt to get consumers to buy the product. Corporate advertising: this focuses on the business in attempt to improve and promote its image rather than a particular product. In order for an advertisement to be effective it should meet the following criteria: It has to reach its target audience. It must be attractive and appealing to its target audience, for example by using particular images or personalities. It must bring in a higher amount of money through sales revenue then it took to produce the campaign. Within the UK there are two bodies which monitor advertisements:The Advertising Standards Authority (ASA): this ensures that any advertisements shown in newspapers, magazines or posters are ‘true, decent, fair and legal’. If consumers complain about an advertisement then it’ll be looked into and could end up being banned. The Independent Television Commission (ITC): this keeps a check on advertisements broadcast on the radio, television and cinema. As with the ASA, consumer complaints are taken very seriously and could lead to a business being banned from advertising completely.

Branding and PackagingAnother way in which businesses make their product stand out against the products of their rivals is via branding and packaging. A company wants to create a certain image in the minds of their consumers and stress the uniqueness of their product..The brand is another term for expressing the name of the product. Businesses attempt to reflect the product’s character through its brand and to create brand loyalty so that consumer’s repeat-purchase in the future. If the brand is strong then the price can be higher thereby increasing its profit-margin. It’s also a good basis from which to launch new products.Packaging is also an important way in which consumers can tell one product from another. In addition, it protects the product and can be used to include competitions and prices in order to increase sales further.

Loss LeadersA loss leader is a product often sold by supermarkets. They themselves don’t make a profit but are used to attract customers in who’ll then buy profit-making products as well as loss leaders.

Personal SellingThis includes door-to-door selling, exhibitions, and trade fairs. A salesperson is given the opportunity to show how the product works and also gauge how it’s viewed by consumers. This form of selling is also known as direct marketing because the business is in direct contact with its consumers as opposed to reaching them through a retail outlet.

Direct MailAlso known by consumers as ‘junk mail’, this is where promotional material is sent directly to consumers’ homes from a list of known consumers. Although more personal it usually fails to create a big enough sales revenue. Telephone selling is also direct and a little cheaper than the post.

Sales PromotionsThis is a short-term method used to increase the sales volume of a product. Examples include price discounts, discount coupons, and competitions. Usually they go hand in hand with national advertising campaigns and can be endorsed by personalities. This tactic has been become increasingly popular.

Marketing and Competitiveness Competitiveness enables a business to survive and grow within their market. Consumers are attracted to the business because it meets their needs. When the marketing mix is used successfully it will ensure that the products produced are different from those of any competitors thereby giving the business a competitive edge. Determinants of the competitiveness of a business include:- Investing in new equipment or technology- Using training and education to improve employee skills- Improving innovation through research and development- Being enterprising- Ensuring the effectiveness of the marketing mix- Improving level of workforce motivation- Ensuring the efficiency of operations management- Putting quality procedures in place- Ensuring the effectiveness of financial planning and controlUsing these as a base, there are four main areas in which a business can improve its competitiveness:- Financial management: for example, budgeting- Operations management: which includes investing in new machinery- Human resource management: training staff and improving levels of motivation - Marketing: attracting more customers

Market ConditionsThere is a wide range of markets which provide products and services. Rarely it’s the only business in a market and if a good idea is brought out other businesses will soon bring out copies in an attempt to cash in on its success. In order to survive smaller businesses need to ensure that their product has a Unique Selling Point (USP). The USP could be due to:- Being more specialised- Sold in a more convenient place- The brandEven major businesses need to modify their marketing mix so that they can compete. They often need to regenerate a product to ensure its survival.

Degrees of SurvivalWhich markets a business competes in depends on a a number of factors

Perfect CompetitionIn perfect competition lot of small businesses compete and all products are basically identical. Examples include the stock market and fruit and vegetable stalls. There are no barrier to entry or exit this market and cost efficiency and optimum efficiency are required in order to survive. The disadvantages to this competition is that there’s no real scope for marketing and very low profit margins.

Monopolistic CompetitionThis is also composed of a lot of small businesses but the products are differentiated. Examples include hairdressers, cafés and plumbers. There are hardly any barriers to entering or exiting this market and cost efficiency and minimisation are very important unless the business has a strong USP. Businesses don’t have much control over their prices and profits tend to be low. Marketing is advantageous to make a business more well-known to its customers.

OligopoliesThere are fewer companies involved and they’re usually medium to large in size. The products are differentiated and examples include supermarkets and banks. The barriers for entry tend to be high mainly because the businesses already there are established and have good brand loyalty. Instead of price, the businesses tend to compete on other factors. Profits are usually high through branding and UPS and a lot of capital is spent on promotion. Occasionally collusion occurs between businesses.

MonopolyIn theory there’s only one dominant business however legally a monopoly is where a business owns more than 25% of a market. A dominant monopoly is one that owns over 40%. Their products are very unique and examples include Royal Mail and Microsoft. The barriers to enter are very high and could even be governmental. These businesses are the price setters and have to deal with low levels of competition. Their power is proportional to the importance of their product and the profit margins are extremely high.

Marketing Mix & Promotion

Marketing & Competitiveness