Download Topic 1.4 Making The Start Up Effective

Topic 1.4
Making The Start Up
Effective
Unit 19
Topic Overview
This topic considers the practicalities of making a
business idea happen. What are the objectives in
setting up? What are the qualities of a successful
entrepreneur? How will estimates of revenue,
costs, profit and cash flow fit into the business
plan? And what sources of finance are available
to a start up business?
Objectives
• Understand that any business needs customers to survive,
• Appreciate that knowing who and how many customers might
be interested in buying a product from the business is
important,
• Understand that a business must anticipate, identify and meet
customers needs if it is to be successful.
• Understand that a business will have to consider its the
product itself, the price, the, and how to make customers
aware of the product (promotion) and how to get the product
to the customer (place) as important elements in meeting
customer needs,
• Understand that different businesses will place different
emphasis on the elements of the ‘marketing mix’ and that the
mix can be amended to meet changing customer needs.
Key Terms
• The Marketing Mix – the combination of factors which will be
taken into account when selling a product to its customers. A
mix of Product, Price, Place and Promotion.
• Price – the amount of money the customers have to pay to
acquire a product.
• Place – the way in which the product is distributed – how it
gets to the customer.
• Product – the good or service that the business is providing to
the customer.
• Promotion – communication between the business and the
customer, making the customer aware of where the product is
for sale, explaining what the product is and making the
customer aware of how the product will meet their needs.
Customer Focus and
the Marketing Mix
Unit 19
Customer Focus
• A business can only survive if it has customers.
• The customers must be willing to pay a high enough price to
cover the costs and make a profit.
• Focussing on what the customer wants is essential and a
successful business can anticipate changes in customer needs.
• For a small start up business customer focus is essential if it
want to make the business a success.
• Entrepreneurs may have good ideas but they also have to have
enough customers willing to pay for the product or service
Identifying Customer Needs
• Businesses must understand what their customers want from
a product or service.
• Customers may have different needs from the same product
or service.
• EG
• Jewellery – some businesses make jewellery for fun, or
impulse (spur of the moment) purchase – this tends to cheep
and colourful, while other businesses may make expensive
jewellery for one off purchases like engagement rings. This
sort of jewellery satisfies completely different customer
needs.
Anticipating Needs
• A successful business must understand what its customers
want in advance.
• Businesses need to be at the forefront of their field, they must
be able to try to understand who the market and customers
needs will change
• Can you think of any business that has done this?
• Apple – iPod, iPod
Meeting Customer Needs
• Identifying and anticipating customer needs is not enough,
businesses then need to MEET their customers needs.
• If the market wants ‘smart and inexpensive’, then the business
will have to supply products to match.
• EG.
• If you buy a £2.00 necklace – what do you expect?
• If you buy a £2000.00 necklace – what do you expect?
The Marketing Mix
• Any business must consider the marketing mix.
• This is the combination of factors that helps a business to sell
its products.
• There are 4 parts to the marketing mix, Price, Product,
Promotion, and Place.
• There are often called the 4 ‘P’s’ of marketing
The Marketing Mix
• PRICE – the price of a product must reflect the value that
its’ customers place on that product.
• Price, quality and how the customers perceive the product are
all interlinked.
• Price is also important because it will affect how much a
business earns from its work.
• What products can you name that you perceive to be of
value? Eg Cars, Bikes, Clothes
The Marketing Mix
• PRODUCT – the product sold must meet the customers
needs,
• This means identifying in to which segment of the market you need
to sell, will it be a cheep products aimed at ‘mass’ market or
expensive products aimed at a ‘niche’ market?
• Once the product is in production it needs to be attractive and well
made for the price.
• Businesses have to make sure that the product meets the customers
needs by doing what it says it will or having appropriate technical
specifications. The look and design of the product may be important
factors in the customers decision about buying it.
The Marketing Mix
• PROMOTION – Customers need to know that a
product exists and is available for purchase. Promotion is
partly about giving them knowledge about the product and
making them aware it exists.
• It is also about persuading them that they want to buy the
product.
• Promotion includes; advertising, printed brochures, mailing
leaflets (direct mailing), sales promotions and sponsorship.
• What other forms of advertising do you know?
The Marketing Mix
• PALCE – The place is about having the product available
for the customers where they want it, when they want it!
• Having turkeys on sale in Scotland in July for sale to customers
in London for Christmas is bad marketing – the place is all
sorts of wrong!
• How to get the product to the customers?, Should you sell to
specialist shops?, Should you sell to supermarkets?, Should
you sell only on the internet? Is it like many products whose
sales peek at certain times of the year?
• What places can you think of to sell products?
Differences in the Marketing
Mix.
• The marketing mix is different for each business and for each
industry.
• The marketing mix is different for cornflakes and cars, for
jewellery and jeans!
• Advertising has different costs, TV advertising costs hundreds
of thousands of pounds. Advertising to sell on Ebay does not
cost a lot.
• The marketing mix will also depend on the quality of the
product to be sold like Dolce& Gabbana or M&S compared to
Primark or TopShop
• The place that the product is advertised will either reach a
large or small audience, therefore, reaching a large or small
audience
The Marketing Mix
Task
• There is a new chocolate bar ready to launch called (the name
of the chocolate bar you made)
• You need to decide on the marketing mix to promote the new
chocolate bar.
•
•
•
•
The Price, of the product,
The Product, quality
The Promotion, where and how will you advertise it, and
The Place, where does the product need to be.
• Write in detail and explain what you have chosen
Exam Top Tip
• PLACE - is much more than about where a
product is sold (like a shop for example). It is
about how the business gets its product to the
customers when they want it. PLACE is, therefore
also about distribution methods.
• In different industries the customer needs
change quickly or slowly – when you answer a
question relate it to the industry you are talking
about – eg clothing = quick changing, farming =
slow change
Homework
• Unit 19 Homework