National 5 Business Management - Management of Marketing and Operations

First unit of National 5 Business Management

Marketing

The process of identifying, anticipating, and satisfying customer needs while achieving business goals.

Purpose of Marketing

To satisfy customer needs, inform about products, increase sales, and improve image.

Importance of Marketing

Helps businesses meet customer needs and promote products effectively using the 4Ps.

Successful Marketing Mix

The right product, sold at the right price, in the right place, with the right promotion.

4Ps of Marketing (Marketing Mix)

Product, Price, Place, Promotion – the main elements of a marketing strategy.

Market Share

The percentage of total sales in a market made by one company.

Market growth

The increase in total sales or size of a market over time.

Customer

The person or organisation that buys and uses a product or service.

Target market

A specific group of customers a business aims its products or services at.

Benefits of Target Marketing

Improves customer satisfaction, loyalty, pricing accuracy, and marketing efficiency.

Market Segmentation

Dividing customers into groups based on characteristics such as age, gender, income, religion/culture, lifestyle.

Segmentation by Age

Products targeted at specific age groups (e.g., toys for children).

Segmentation by Gender

Products designed for men or women (e.g., perfume/aftershave).

Segmentation by Income

Products aimed at different income levels (e.g., luxury brands vs. discount stores, Waitrose target people with a higher income).

Segmentation by Religion/Culture

Products tailored for beliefs or cultures (e.g., halal meat).

Segmentation by Lifestyle

Products based on interests or hobbies (e.g., gym memberships).

Advantages of Market Segmentation

Products can be aimed at specific needs, increasing customer satisfaction and sales.

Disadvantages of Market Segmentation

More market research is required (costly); smaller target markets can limit sales volume.

Market Research

Gathering, analysing, and interpreting data about customers, competitors, and trends.

Purpose of Market Research

To identify customer needs, test new ideas, and gather competitor information.

Field Research (Primary)

Collecting new, first-hand information for a specific purpose.

Advantages of Field Research

Up-to-date, relevant, reliable, specific.

Disadvantages of Field Research

Expensive and time-consuming, requires trained staff.

Desk Research (Secondary)

Using existing information gathered by others.

Advantages of Desk Research

Cheap, quick, and readily available.

Disadvantages of Desk Research

May be outdated, biased, or irrelevant.

Methods of field research

Postal Survey, Telephone Survey, Focus Group, Personal Interview, Online Survey, Social Media Research, Loyalty Cards

Postal Survey

Questionnaire sent by mail – cheap but low response rate.

Telephone Survey

Questions asked over the phone – fast but may annoy customers.

Focus Group

Small group discussion for opinions – detailed feedback but costly.

Personal Interview

Face-to-face questions – in-depth information but time-consuming.

Online Survey

Digital questionnaire – quick and inexpensive but may miss some audiences.

Social Media Research

Gathering opinions from online users – wide reach but public.

Loyalty Cards

Track customer purchases for research – useful data but privacy issues.

Methods of desk research

Internal records, Newspapers, Magazines, Websites, Government Statistics, Social Media

Internal Records

Company data such as sales figures, invoices, and previous reports used for desk research.

Newspapers

Print or online daily/weekly publications used as a source of market news and trends.

Magazines

Periodicals (often specialist) used to find industry-specific information and adverts.

Websites

Online company, industry or news sites that provide up-to-date information and statistics.

Government Statistics

Official data (e.g., census, trade figures) used for reliable market facts.

Social Media (as desk source)

Public posts, pages and analytics used to spot trends and customer sentiment.

Distinguish between Desk Research and Field Research

Desk research uses existing sources and is cheaper/quick; field research gathers new, first-hand data and is more specific but costlier.

Product

The goods or services a business sells to meet customer needs.

Product Development

The process of creating, testing, and launching new products.

Stages in Product Development

Carry out market research → Generate the idea → Analyse the idea → Produce a prototype → Test the product → Alter/Improve the product → Launch/Produce the product.

Advantages of New Product Development

Meets customer needs and can increase profit.

Disadvantages of New Product Development

Time-consuming, expensive, and may fail.

Product Life Cycle

The stages a product goes through – Introduction, Growth, Maturity, Decline.

Introduction Stage

New product launched, few sales, heavy promotion.

Growth Stage

Rapid sales increase, profits rise.

Maturity Stage

Sales peak, high competition, stable profit.

Decline Stage

Sales fall, product withdrawn.

Price

The amount of money customers are willing to pay for a product.

Factors Affecting Price

Production costs, competition, quality, profit margin, and market demand.

Cost-plus Pricing

Adding a percentage profit to the cost of making the product.

Competitive Pricing

Setting prices similar to competitors.

Price Skimming

High price at product launch, then reduced later.

Penetration Pricing

Low initial price to attract customers, then increased later.

Promotional Pricing

Temporary low price to boost short-term sales.

Destroyer Pricing

Very low prices to eliminate competitors.

Psychological Pricing

Making prices appear cheaper (e.g., £9.99 instead of £10).

Premium Pricing

Setting a higher price to create a luxury image.

Advantages of Competitive Pricing

Attracts price-sensitive customers; avoids price wars.

Disadvantages of Competitive Pricing

Limits profitability; less differentiation.

Brand

A name, symbol, or design used to identify a product or business.

Advantages of Branding

Creates recognition and loyalty; allows higher prices; helps launch new products.

Disadvantages of Branding

Expensive to create and maintain; damage to one product can harm the brand image.

Own Brand Products

Goods sold under a retailer’s own name (e.g., Tesco Finest).

Advantages of Own Brand Products

Cheaper for customers; no expensive advertising.

Disadvantages of Own Brand Products

May be seen as lower quality; poor product can hurt reputation.

Packaging

The materials and design used to protect, promote, and present a product.

Advantages of Packaging

Protects products, attracts customers, provides legal and product information.

Disadvantages of Packaging

Adds cost, can harm the environment, may require strict labelling.

Consequences of Poor Packaging

Damaged goods, customer complaints, reduced sales, poor reputation.

Place

Where and how a product is made available to customers.

Business Location Factors

Proximity to customers, transport links, skilled workers, grants, competition, parking.

Advantages of Good Location

Attracts more customers; reduces delivery costs.

Disadvantages of Poor Location

Lower sales, higher transport costs.

Methods of distribution

Road, Rail, Air, Sea

Road

The road network is used to transport goods using large trucks, lorries and vans.

Road Advantages

Can be cheaper than other methods, Many types of good can be delivered, can be delivered to the customer’s door.

Road Disadvantages

Speed limits mean goods may be delayed, Fuel costs are high, Traffic jams and road works can cause delays.

Rail

The rail network is used to transport goods.

Rail Advantages

Less delays than road, Large orders can be transported.

Rail Disadvantages

Train station may not be close to delivery destination.

Air

Goods are delivered by aircraft

Air Advantages 

Goods can be delivered world-wide, Quicker than by sea.

Air Disadvantages

Can be expensive, Airports may not be close to destination.

Sea

Goods are delivered by sea/boat/ship

Sea Advantages

Goods can be delivered world-wide, Can transport large products.

Sea Disadvantages

Can be expensive, Can be time-consuming.

Factors Affecting The Method Of Distribution

Size, Distance, Time Required, Product Perishability

The size of the product

large items may often be delivered by rail as they cannot travel safely by road.

The distance of the delivery

if an item is to travel abroad then it is likely to go by air or sea as road will take too long.

How quickly the item is required

UK items will be delivered by road as they can go directly to the location/railway stations are not found in every town.

The perishability of the product

the method of transport must be capable of keeping the item in a safe way such as refrigerated lorries.

Comparing Methods of Distribution

E-Commerce

Selling goods online 24/7 to a global market.

Advantages of E-Commerce

24/7 availability, global reach, reduced costs, customer data collection.

Disadvantages of E-Commerce

Website setup costs, delivery delays, cybersecurity risks.