Welcome to BUSS2! Download all of today’s resources, including suggested answers from www.tutor2u.net/buss2.pdf Today Session 1: Marketing Mania Session 2: Funky Finance BREAK (Noon) Session 3: Awesome Ops LUNCH (1.00-1.50 p.m.) Session 4: Effective People Session 5: Cool Competiveness and Exam Skills Session Focus 1. 2. 3. 4. Influences of Pricing Distribution Channels Price Elasticity of Demand Product development Throughout - focus on exam skills Q1 Give me three key influences on a firms choice of price 1 The market the business operates in 2 Rival competitors prices 3 The price elasticity of demand Q2 3 problems and 3 benefits of a business operating in a niche market moving into a mass market Problems – Niche to Mass Benefits – Niche to Mass Increased competition from much larger firms who may be able to offer much lower prices Much larger target market with far more customers to aim at increasing revenue opportunities May lose the ability to meet the individual needs of customers and respond to their needs Ability to lower unit costs as the fixed costs of the business will be spread over more units of output May alienate existing customers who preferred purchasing from a unique, niche business Lower chance of business failure as less reliant on a small group of customers I am thinking of 3 things that might influence a businesses choice of distribution channel What are they? The type of product The Competitors targetbeing market sold Examiners Tip: Making Connections In your exam you are trying to demonstrate GOOD ANALYSIS. One way of showing the examiner GOOD ANALYSIS is to develop a logical chain of argument which shows GOOD CONNECTIONS The next activity will help develop this skill What’s the connection? Price Elasticity of Demand Profit If a product is price inelastic then the business can increase the price and although demand may fall, the percentage fall in demand will be less than the percentage increase in price meaning that the firms revenue will increase as well as profit Let’s focus on some marketing maths Read through the Shakeaway case study Outline ONE REASON why you think that the Millionaire Milkshake has a price elasticity of demand of -0.3 1 It is a unique product with very few competitors as it uses real gold in its ingredients. Consequently, this means that there is no real substitute for the milkshake and is therefore relatively price inelastic Question.. Calculate how much more revenue would be generated by the Millionaire Milkshake if the price was increased to £12.00 Calculate how much MORE revenue would be generated by the Millionaire Milkshake if the price was increased to £12.00 The price elasticity of demand is -0.3. Shakeaway are considering raising the price from £10 to £12 and demand is currently 350 milkshakes Current revenue = 350 x £10 = £3500 £10 to £12 20% x 0.3 = An increase of 20% = A decrease in demand of 6% Demand for the milkshake would therefore reduce from 350 to 329 329 x £12 = £3,948 Difference in revenue = £448 (£3,948 - £3,500) Always show your working out when completing calculations. This way, even if you get the answer wrong you may still be awarded some marks if the examiner can see some evidence of understanding True The most important element of the marketing mix depends on the business The Boston Matrix compares market size with market share A PED of -4 means the product is inelastic Loss leader is a pricing strategy An oligopoly is a market dominated by several large businesses False Activity 6 Taking the Biscuit Read through the case study Examiners Tip: Application Application is all about answering questions in CONTEXT. To achieve GOOD APPLICATION you need to make sure that your answer is well applied to the case study The next activity will help develop this skill Q1 1 Explain ONE influence on Biscuiteers pricing decisions One influence on Biscuiteers pricing decision is the cost of the supplies. This is because Biscuiteers use only the best natural ingredients and pay a premium price for their supplies and therefore the price will need to ensure that it covers this extra cost What’s the connection? • Different students provided with different ‘what’s the connections’ Stepping Stones • Different students provided with connections that are closer or further apart (clustering) Step Your Way to Success!! • Weaker students provided with a ‘middle’ connection to help bridge the gap a greater chance that their target audience will see the TV advert . This could increase the effectiveness of this method of promotion resulting in increased customer footfall for the business. What’s the connection? • Different students provided with different ‘what’s the television advertising would allow Shakeaway connections’ to promote its products because Shakeaways target market is 10-20 year olds Shakeaway can target their customers by advertising in between children's TV shows leading to and services to a national audience. Also • Different studentswhy provided Analyse TWO reasons Shakeaway uses TV advertising as with connections that areof promotion its main form closer or further apart Shakeaway is the worlds largest(clustering) milkshake company meaning it would have a budget large enough to afford TV advertising which is very expensive. In addition • Weaker students provided with a ‘middle’ connection to help bridge the gap Shakeaway consists of 35 stores and is therefore a national business. This means that Exam Style Question Analyse TWO reasons why Biscuiteers has a policy of continual product development within it’s business (8 marks) One reason why I think that Biscuiteers has a policy of continual product development within its business is: Step 1 that it will allow Biscuiteers to become more competitive. This is because Step 2 Biscuiteers have carved out a reputation for innovative products and therefore Step 3 continually developing new products will allow Biscuiteers to retain their unique selling point in the market place and keep their price at a premium. In addition to this Step 4 their policy of continual product development has allowed them to enter new markets by developing products such as chocolates, cakes and greeting cards which also Step 5 allows them to meet one of their main objectives which is to expand the business Exam Style Question To what extent has the products of Biscuiteers been the most important element of its marketing mix? Justify your view (15 marks) Recent examiners reports have highlighted that the best strategy to ensure you reach the higher marks is to choose TWO or THREE arguments and DEVELOP your points FULLY rather than choosing several points and failing to developing them = write answers that make the connections + write chunky paragraphs By building a logical argument using connectives which in turn… therefore… this might mean… A consequence of this might be … this is because on the other hand… Exam Style Question To what extent has the products of Biscuiteers been the most important element of its marketing mix? Justify your view (15 marks) Definition of Marketing Mix One reason The product is handmade, and uses an old fashioned technique which gives it a unique selling point. This enables Biscuiteers to compete and differentiate themselves from other biscuit manufacturers in this highly competitive market. Product most important However, May not important The marketing mix is the combination of a firms product, promotion, price and place that work together in order to meet the firms marketing objectives be Overall , I feel that most Other elements of the marketing mix are also important to Biscuiteers, for example, it’s promotional strategy. Biscuiteers advertise in exclusive magazines such as GQ, Vogue and Elle which allows Biscuiteers to target a more exclusive market who will be prepared to pay the high prices it charges. Product is the most important Judgement because Biscuiteers products dictates the rest of its marketing mix. The product is a quality handmade biscuit which therefore allows them to charge a higher price. Justify and apply Promotion is needed in order to convey the image of luxury and all elements of the marketing mix need to be integrated effectively to deliver the most effective marketing campaign. However, their product of handmade biscuit gives them their USP.