Download Session 1

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.