Business Management Final Exam - Revision Guide

Marketing

Marketing

The process of anticipating, identifying, and satisfying the needs and demands of consumers while ensuring profitability

Marketing Myopia (Levitt, 1960)

The idea that people were blind to what their business was actually about. They believed that it was about producing things and selling them, but businesses are actually about meeting the needs of people. Businesses started taking a marketing perspective by considering the market they were in rather than just the product/service itself.

Market Orientation

An approach to business that prioritises identifying the needs and desires of consumers and creating products and services that satisfy them

1. Customer orientation: being aware of consumer needs and satisfying them

2. Competitor orientation: how are the needs being met by others in the field

3. Inter-functional coordination: looking at the overarching industry

Marketing Mix (Borden, 1964)

The way businesses manipulate selling, advertising, pricing, etc. to ensure profit generation

Elements of the Marketing Mix (4P’s)

1. Product: providing products to satisfy a need not currently being met to create demand

2. Place Distribution: finding the right place to market and sell the product

3. Promotion: effectively advertising the product

4. Price: identifying the right cost to ensure target audience re likely to repurchase

4P’s to the 7P’s

1. Physical Evidence: tangible components of the service are equally as important because customers are assessing the overall quality of the service

2. Process: service delivery (inseparable from customer consumption process) needs to satisfy customer expectations

3. People: services are delivered by customer service personnel (experts interaction with customers e.g., hairdressers)

Integrated Marketing Mix (Hall et al.)

The idea that focusing on one of the elements of the Marketing Mix is not enough - different parts must intersect in order for a business to function effectively

Marketing Communications

The actions a business takes in order to communicate with their different audiences (stakeholders) e.g., shareholders, employees, customers, etc. to ensure profit

Tasks of Marketing Communications - DRIP

1. Differentiate: positioning of a brand for how it is perceived 

2. Reinforce: remind customers of brand

3. Inform: make customers aware of brand’s existence

4. Persuade: encourage customers to behave in certain ways

Advertising

A non-personal form of selling where messages are transmitted through media to reach large audiences

Sales Promotion

A tool used in consumer markets to accelerate sales, but it needs to be integrated with other communications tool to ensure effectiveness (e.g., coupons, discounts, etc.)

Public Relations

A tool consisting of management activity to shape the attitudes of the organisation’s stakeholders in order to develop a mutual understanding

Direct Marketing

A tool for managing consumer behaviour through media-based activities that respond with existing or potential customers by generating personalised messages from collected customer information (e.g., emails, calls, etc.)

Personal Selling

A tool of interpersonal communication consisting of messages adapted to satisfy both parties involved (the salesperson and a potential customer)

Marketing Strategy

A business’s overall game plan to facilitate the selling of its product by reaching prospective consumers and turning them into customers

Porter’s Five Forces

An analytical model used to identify and assess the intensity of competitive forces within an industry  

Threat of New Entrants

The risk a new competitor creates for current companies within an industry

Threat of Substitutes

The availability of other products that a customer could purchase from outside an industry

Bargaining Power of Buyers

The pressure that consumers can put on businesses to get them to provide higher quality products, better customer service, and/or lower prices

Bargaining Power of Suppliers

The pressure that suppliers can put on companies by raising their prices, lowering their quality, or reducing the availability of their products

Intensity of Competitive Rivalry

A measure of the extent of competition among existing industries to limit each other’s profit

Porter’s Generic Strategies

The ways in which a company pursues competitive advantage across its chosen market scope (cost leadership, differentiation, focus)

Cost Leadership

A strategy where companies aim to be the lowest-cost producer in the industry through the mss production of standard products

Differentiation

A strategy that involves making your products or services different from and more attractive than those of your competitors through superior performance, durability, branding, etc.

Focus

An approach concerned with particular niche markets to understand the unique needs of customers within it in order to develop well-specified products

Ansoff’s Matrix

A decision-making tool for marketing planning that provides a range of strategic choices with different degrees of risk

1. Existing products/existing market: market penetration (focuses of increasing sales of existing products into an existing market)

2. Existing product/new market: market expansion (focuses on selling existing products into new markets)

3. New product/existing market: product development (focuses on introducing new products to an existing market)

4. New product/new market: diversification (focuses on entering a new market with altogether new products)

Stakeholder

Any group of people that can affect and are affected by the goal of business operations

Shareholder

Owners of the firm

Freeman’s Stakeholder Model

A company's real success lies in satisfying all its stakeholders, not just those who might profit from its stock

Stakeholder Conflict of Interest

A situation in which the interests or goals of different stakeholders in an organisation are in conflict with one another

Corporate Social Responsibility

A business model by which companies make an effort to operate in ways that satisfies all stakeholders involved

McIntosh’s Approaches to CSR

The idea that approaches to CSR falls under a continuum

1. Minimalist: business's only obligation is to compete to the best of its abilities without deception or fraud

2. Discretionary: compliance with CSR is desired, but not required by the company

3. Strategic: incorporating corporate social responsibility initiatives into business activities

Friedman’s Doctrine

Friedman argues that the idea that corporate officials have a ‘social responsibility’ that goes beyond serving the interests of their stockholders shows a fundamental misconception of the character and nature of a free economy. He argues that the business of business is business i.e., the responsibility a business has is to generate profit.

Triple Bottom Line (3P’s)

A framework that incorporates three dimensions of performance: social, environmental, and financial

1. Profit: measure of corporate revenue

2. People: measure of social responsibility

3. Planet: measure of environment responsibility

Government as Business

Governments may pose as business because they employ people, buy and sell goods/services, and make profit/loss (i.e., surplus/deficit)

Private Sector

Owned and controlled by individuals

Public Sector

Owned and controlled by the government

Third Sector

Non-governmental and non-profit organisations (NGO’s)

Natural Monopolies

When fixed costs are extremely high, economic increase with scale, making competition uneconomic

Privatisation

The selling of government business to private owners

Nationalisation

The acquisition of private business by the government

Globalisation

The expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to "shrinking of the world" in economic terms - the trend towards a more integrated global economy

Globalisation of Markets

The merging of historically distinct national marekts into one huge global marketplace

Globalisation of Products

The sourcing of goods from locations around the world to take advantage of differences in costs and factors of production

Drivers of Globalisation

1. Technology: mobile banking, media 

2. Transportation: plane, train, ships

3. Communication: internet, emails

4. Growth of economic cooperation - trading blocs, trade and foreign direct investments

5. Convergence of consumer needs: product selection, standardisation of luxury products

6. Production: global supply chains

Technology

Technological advancements that improve efficiency by applying information to the production process

Technology in Different Industries

1. Primary Industry (e.g., automation)

2. Secondary Industry (e.g., robotics)

3. Tertiary Industry (e.g., logistics, media, retail)

4. Information Communication Technology

E-commerce

The process of buying and selling products/services over the internet through the exchange of data or currency to process a transaction

Direct to Customer (DTC)

The business model of selling products directly to customers and thereby bypassing any third-party retailers or wholesalers

Disintermediation

The removal of intermediaries in economics from a supply chain (supplier to buyer)

Intermediation

The addition of a party between the buyer and seller responsible for helping either parties complete the transaction

Fixed Costs

A business expense that doesn't change even with an increase or decrease in the number of goods and services produced or sold

Marketplace

The space where buyers and sellers interact, either physically or digitally