HUZ BUZ

Business Basics

Definitions

• Service: An intangible offering, such as Marianopolis's education and therapy, that aims to improve others' well-being.

• Goods: Tangible, touchable products that can be sold.

Company Characteristics

• Companies often engage in both services and goods; for example, Marianopolis has a cafeteria (goods) and education services (services), though it primarily focuses on services.

Not-for-Profit Organizations (NFP)

• Definition: Charities that focus on causes to help others. While they can generate profits, these should be reinvested into their mission, like providing scholarships or renovations at Marianopolis.

• Profit Management: Unlike traditional businesses, profits in NFPs are required to be used to further their causes.

• Importance of Profit: Profit signifies effective management; skilled entrepreneurs typically reinvest profits for future growth.

• Profit Calculation: Profit is defined as Revenues - Expenses (also known as sales - cost).

Business Categories

• Producing Goods:

  • Capital Intensive: Requires significant financial resources, particularly for investments like factory construction.

• Providing Services:

  • Labour Intensive: Relies on a larger workforce and is less reliant on capital than goods production. Most businesses (approximately 80%) operate as service-oriented entities (e.g., Apple, Tesla, Amazon).

Growth of the Service Sector

• Increased Disposable Income: As people have more surplus income, they spend more on additional services.

• Changing Demographics: An aging population necessitates more healthcare and housing services, while decreasing material resources.

• Complex Goods and Technology: The rise of new technologies increases the demand for installation, coaching, and training services.

• Professional Advice: There's a growing need for specialized guidance, particularly in business.

• Low Barriers to Entry: Service businesses typically require less initial financing to start compared to product-based enterprises.

Entrepreneur:

·       Someone who starts a business

·       They create jobs and drive up the standard of living, which increases the quality of life

Know the history of business from PPT

·       What is the era of the hard sell, which is the production era

Know the factors of production from PPT

Five Forces of Business

1. Economy: Factors such as interest rates and potential recessions that can impact borrowing costs and overall market stability.

2. Competition: The presence of numerous competitors in the market that can influence pricing and market share.

3. New Technology: The necessity to continually invest in and adapt to emerging technologies to stay relevant and competitive.

4. Global Forces: Consideration of international dynamics and online competition that may affect local businesses.

5. Trends: The importance of staying updated on market trends and consumer preferences, ensuring that businesses remain relevant and responsive to change.

Entrepreneurship

• Definition: An entrepreneur is a risk-taker who starts and manages a business.

• Characteristics:

  • Enjoys mental challenges and stimulation.

  • Values personal freedom even if it involves hard work.

  • Motivated by the potential for significant financial success.

  • Often begins with limited capital, experiences losses, but strives for eventual profits.

  • Interested in independence and flexibility, often facing survival challenges.

  • About 25% prefer to maintain a stable business rather than pursue growth due to the pressure of keeping up with trends.

• Traits:

  • Resilient, visionary, energetic, passionate, tolerant of failure, and effective decision-makers.

Funding Sources

• Entrepreneurs require capital to start, but banks may hesitate to lend to inexperienced individuals:

  • Personal Resources: Savings, credit cards.

  • Bank Loans: Institutions like BDC offer small loans.

  • Angel Investors: Wealthy individuals investing in startups.

  • Venture Capital: Larger firms providing funding.

  • Love Money: Funding from family and friends.

Opportunities for Small Businesses

• Targeting market niches and unique problems.

• Providing personalized customer service.

• Maintaining lower overhead costs by employing fewer staff.

• Leveraging technology for online business and resources.

• Empowering minorities and vulnerable groups with flexible options.

• Lower stakes allow for easier restart opportunities.

Threats for Small Businesses

• High risk of failure, with around a 70% failure rate within 10 years.

• Limited knowledge and experience can hinder success.

• Insufficient funds and financial resources.

• Increased regulatory burdens specifically impacting smaller companies more than larger ones.

How to Start a Business (Test)

• Buy a Franchise: Operate under an established brand (restaurants, hotels). Training provided, less creativity, tends to succeed, but expensive.

• Start from Scratch: Build everything yourself. Complete independence but face challenges without funding or guidance.

• Buying an Established Business: Purchase an existing business with a customer base and employees. Easier to get financing but may inherit issues from past management.

• Take a Chance Young: Starting young reduces risks due to fewer personal commitments and a higher capacity to bounce back from failures.

Intrapreneur

• Definition: Works within a company, exceeding regular duties.

• Traits: Leadership qualities, drives innovation, and contributes to business success.

Managing Business (Test)

Sole Proprietorship

• Definition: One owner with 100% of profit who pays all expenses.

• Pros:

  • Easy to manage.

  • More freedom and independence.

  • 100% control for the owner.

  • Pride in owning the business.

  • Possible tax advantages (tax break/tax deductions of around 50%; keep receipts).

• Cons:

  • Limited funds to finance.

  • Unlimited liabilities (personal assets are at risk in bankruptcy).

  • Lack of permanence (business dies with owner).

Partnership

• Definition: More than 2 owners share the profit under a contract that specifies profit distribution.

• Pros:

  • Shared debts and expenses.

  • Pool financial resources.

  • Share work and responsibilities.

  • Easy to start.

  • Tax write-offs available.

• Cons:

  • Unlimited liability (one partner's debt affects others).

  • Lack of continuity.

  • Low paperwork requirements.

Different Types of Partnerships

1. General Partnership: All partners have unlimited liability, low paperwork.

2. Limited Partnership: One partner has unlimited liability, the other has limited liability based on resources.

3. Limited Liability Partnership: All partners have limited liability, common in law firms and consulting firms.

Corporations

• Definition: Thousands of owners share a small part of the profit; a legal entity separate from its owners.

• Pros:

  • Owners are not personally liable for corporate debts.

  • Limited liability.

  • Continuity of existence (business survives beyond the owner's life).

  • Easier to raise capital and attract top management.

  • Ease of ownership transfer.

• Cons:

  • Extensive paperwork.

  • Potential for double taxation.

  • Conflicts of interest.

Three Types of Corporations

1. Cooperatives: Owned by members who share benefits to improve pricing and access to goods (e.g., student co-ops, farmer co-ops).

2. Not-for-Profit: Operate in public and private sectors, focus on community benefit rather than profit.

3. Crown Corporations: Government-owned entities (e.g., SAQ, Hydro-Canada).

·       Franchising, not a form of ownership, has a franchisor (the one giving out the franchise) and a franchisee (the one buying the franchise), fewer risks, training & support, brand recognition, and access to funding (easier to get a loan). But they are expensive to buy, lack control, and one poor franchisee reflects on all others, so negative halo effects, limited territory when opening a franchise, difficulty to get the franchisor approval, know the franchise agreement so contract and conditions & terms, needs a lawyer

What does MA mean?

·       MA=MERGER ACQUISITION

·       Merger (when two companies become one) and acquisition (when one firm buys another), why buy because of certain technology, customers and market that they don’t have

·       Three types of mergers:

·       Horizontal mergers, companies in the same industry like Coke and water, because of productivity increase

·       Vertical mergers, two companies in related industries but in different stages like Coke and artificial sweeteners because they’re buying an ingredient that is in their products

·       Conglomerate mergers, two unrelated industries like Coke and chips because they think that they can make the product better

Five pillars of business

Marketing

Promotion

Promotion involves selling a product in a way that makes it appealing to others. There are various strategies for promotion that harness different avenues. Here are some organized categories of marketing:

1. People Marketing

• Definition: Creating a persona and branding around individuals.

• Examples: Celebrities like Mr. Beast and The Kardashians use social media and television to enhance their personal brands.

2. Place Marketing

• Definition: Promoting specific locations or regions to attract visitors or buyers.

• Examples: Tourism initiatives, Airbnb listings, apartment sales, and festivals organized by local governments (e.g., fun festivals in Montreal) aimed at promoting the area.

3. Event Marketing

• Definition: Marketing based on organizing events or festivals to attract participants and encourage engagement.

4. Idea Marketing

• Definition: Selling conceptual ideas, such as political ideas, religious beliefs, or literature.

• Examples: Marketing campaigns for political movements, books, or even cult-like ideologies that aim to persuade people.

Evolution of Marketing (1920 - 2010)

1. 1920s - 1940s: Production Focus

   • Marketing emphasized mass production and efficiencies at the manufacturing level.

   • The focus was on creating products and getting them to consumers as quickly as possible, utilizing radio for advertising.

2. 1950s - 1960s: Selling Focus

   • Post-WWII America saw a shift towards selling techniques as competition increased.

   • Television became a dominant medium for advertising, with companies relying on aggressive sales tactics.

   • The emphasis was on persuading consumers to buy through high-pressure sales techniques.

3. 1970s - 1980s: Marketing Focus

   • A pivotal change occurred with marketers beginning to consider consumer needs and wants.

   • Companies started segmenting markets and targeting specific demographics, leading to more tailored marketing campaigns.

   • The introduction of the internet in the late 1980s laid the groundwork for a new wave of marketing practices.

4. 1990s - 2000s: Relationship Focus

   • Companies moved towards creating long-term relationships with customers rather than just one-time sales.

   • The use of email marketing and early digital strategies emerged, allowing for direct communication and engagement with customers.

   • The rise of websites for marketing purposes provided more opportunities for businesses to connect with consumers.

5. 2010: Digital and AI Integration

   • The marketing landscape evolved with the advent of social media, where companies could interact with customers on platforms like Facebook and Twitter.

   • Data analytics became crucial, allowing for personalized marketing efforts driven by consumer behavior.

   • The emergence of artificial intelligence (AI) began streamlining marketing processes and enhancing customer targeting and engagement.

·       USP=UNIQUE SELLING PROPOSITION

·      

Unique Selling Proposition (USP)

• Definition: A unique selling proposition (USP) is what makes a company or product stand out from its competitors. It tells customers why they should choose this product or service over others.

• Weak Propositions:

  • Low Prices: Just focusing on low prices can suggest a lack of quality or value.

  • Poor Customer Service: If a business doesn’t prioritize customer service, customers are likely to leave for competitors that do.

Honesty in Marketing

• Overpromising:

  • Avoid making unrealistic promises about what your product or service can deliver. If a business oversells its capabilities, it can lead to customer disappointment and loss of trust.

• Underpromising:

  • Don’t downplay the benefits of your product. If customers perceive your offer as less attractive than what competitors provide, they may choose to switch. Being transparent and honest is key.

• Communicating Effectively:

  • Always be truthful. If you face challenges, address them openly and develop a practical plan to communicate with your customers. This helps to maintain trust and prepare for any questions or concerns they might have.

The Importance of a Marketing Plan

• Purpose: A marketing plan is a structured approach that outlines how a business will promote its products or services. It can vary from informal strategies to formal documents that guide the marketing efforts of the organization.

Marketing Segmentation (B2C)

• Definition: Marketing segmentation is the process of dividing the overall market into smaller groups of consumers who have similar needs or characteristics. This allows businesses to target their marketing efforts more effectively. Here are several key types of segmentation:

  1. Demographic Segmentation:

     • Factors: This includes characteristics like age, gender, income, and social class. Example: Different makeup lines are marketed to various age groups.

  2. Geographic Segmentation:

     • Factors: This involves targeting consumers based on their location, such as region or neighborhood. Example: Marketing warm clothing in colder regions.

  3. Psychographic Segmentation:

     • Factors: Focuses on consumers' attitudes, interests, and beliefs. Data can be gathered through surveys. Example: Real estate agents market listings based on lifestyle perceptions.

  4. Behavioral Segmentation:

     • Factors: This looks at consumer behavior, such as usage rates or brand loyalty. Example: Offering free samples to attract customers and convert them from non-users to loyal high users.

Business Market Segmentation (B2B)

1. Customer-Based Segmentation: Grouping customers by their specific needs, e.g., government vs. retail.Examples:

• Government contracts for office supplies

• Retail marketing strategies targeting mall shopper

  2. Product-Based Segmentation: Dividing based on the different products offered, e.g., basic goods vs. custom products.Examples:

• A grocery store (basic goods) vs. a tailor shop (custom products)

• Basic smartphone models vs. high-end luxury smartphones with personalized features

3. Geographic Segmentation: Segmenting based on customers' locations, e.g., adapting products for different climates.Examples:

• Selling winter clothing in colder regions vs. summer apparel in warmer areas

• Fast food chains altering their menus to include rice dishes in Asian markets while emphasizing beef in the American market.

*B2C=BUSINESS TO CONSUMERS (selling for people, individuals like Walmart to Customer) B2B=BUSINESS TO BUSINESS (selling to businesses to business like Sprite to Walmart)

Target Market (businesses choose target customers to sell their products):

·       Size of market: how many people can benefit from this product

·       Profitability: how much profit

·       Accessibility: how accessible

·       Limited competition: competition

The Marketing Mix (4P Framework)

The Marketing Mix (4P Framework) consists of four key components:
1. **Product**: Represents anything a company offers, including tangible goods and services. Differences between service and product include intangibility and perishability.

2. **Price**: The only profit-generating element. Includes various pricing strategies such as penetration pricing, everyday low pricing, and prestige pricing.

3. **Place**: Refers to how products are distributed and made available to consumers. Can involve direct or indirect channels and includes retail categories such as convenience stores and supermarkets.

4. **Promotion**: Involves all activities that communicate the benefits of the product to consumers, including advertising, sales promotions, personal selling, and public relations.

1. Product

• Definition: Represents anything a company offers, including education, services, and tangible goods.

• Spokespersons/Brand Ambassadors: Difficult to control as they are reactive, unlike physical products. Ideally, choose a stable representative (e.g., using a deceased individual).

• Difference Between Service and Product:

  • Service: Intangible and dependent on the provider (e.g., education).

  • Product: Tangible, independent of the maker's identity.

• Characteristics:

  • Goods: Consistent in quality (e.g., identical desks).

  • Services: Variable and affected by human factors (e.g., personality).

  • Perishability: Services cannot be stored; if the provider is unavailable, service revenue is lost.

Strategies for Managing Product Variability and Perishability:

• Minimize Perishability: Implement cancellation fees, confirmations, waiting lists, and overbooking procedures.

• Reduce Variability: Offer specific training, enforce policies and procedures, and maintain strict hiring criteria. Collect feedback for continuous improvement.

Product Classification:

• B2C (Business to Consumer):

  • Convenience Products: Easily accessible items like snacks.

  • Shopping Products: Items that require comparison (e.g., furniture).

  • Specialty Products: High-end luxury items (e.g., Maserati).

  • Unsought Products: Goods consumers do not actively seek (e.g., insurance).

• B2B (Business to Business):

  • Installations: Large business-related equipment.

  • Accessory Equipment: Machinery used in operations.

  • Maintenance, Repair, and Operating Products: Minor tools and supplies (e.g., light bulbs).

  • Raw Materials: Basic ingredients (e.g., metals, food).

  • Component Parts: Various parts used in manufacturing products (e.g., car wheels).

  • Business Services: Services such as catering or law.

2. Product Quality

• Definition: Measurement of reliability and consistency based on price and customer expectations.

3. Features and Benefits

• Focus on Customer Gains: Emphasize the benefits customers receive from the product's features.

• Sales Strategy: Highlight what you can offer (skills, attitude) rather than just what the product is.

4. Product Layers

• Understanding Consumer Motivation: Customers purchase based on the benefits they seek (e.g., communication, time-saving, image).

5. Product Line and Mix

• Product Line Definition: A group of closely related products offered by a single company.

• Difference Between Product Mix vs. Product Line: A product mix encompasses all product lines under a brand.

·      

• Product Mix: Total product lines offered by a single firm.

• Cannibalization: Occurs when one product outsells another to the detriment of the other products, necessitating distinct purposes for each.

·   

Branding

• Brand: The identity of a product that distinguishes it from other brands in the same category (e.g., McDonald's music in ads and mascots).

• Brand Equity: The additional amount of money consumers are willing to spend on a brand (e.g., the premium paid for Apple products over Microsoft).

• Brand Name: A memorable name that creates strong labeling for a product.

Line Extensions vs. Brand Extensions

• Line Extensions: Similar products offered under the same brand (e.g., Coca-Cola and Coke Zero).

• Brand Extensions: New products introduced in a different category under the same brand.

Cobranding

• Involves two established brands collaborating to market a product, which can enhance visibility and appeal.

Packaging

• Functions:

  • Protects products

  • Provides information

  • Facilitates storage

  • Suggests product uses

  • Promotes the brand

  • Attracts attention

Product Life Cycle (PLC) and Innovations

• Axes:

  • X-axis: Time (Introduction, Growth, Maturity, Decline)

  • Y-axis: Stages (Sales and Profit)

• Sales typically peak at maturity, while profits peak at growth, affected by competition and market saturation.

New Product Development Process

• Involves a structured process typically consisting of 6 steps.

New Product Adoption

• First Adopters: 2.5% of the population, often trendsetters (e.g., influencers).

• Laggers: 16% of the population, generally uninterested in new products.

Promotion

• Promotion Mix:

  • Advertising: Paid non-personal communication aimed at influencing a target audience.

  • Sales Promotion: Includes coupons and short-term sales tactics to boost immediate sales.

  • Direct Marketing: Direct outreach to consumers via email or mail.

  • Personal Selling: Face-to-face sales presentations.

Sales Process

1. Identify qualified prospects.

2. Conduct consumer research.

3. Present the product or service.

4. Handle objections related to pricing or quality.

5. Close the sale by securing contracts and payments.

6. Follow up for feedback and maintain relationships.

Emerging Promotional Tools

• Digital Communication: Info exchange through digital channels.

• Product Placement: Featuring products in movies and games.

• Buzz Marketing: Generating hype through social media engagement.

• Sponsorship: Supporting events or teams for brand visibility.

Public Relations and Community Engagement

• Activities like sports teams visiting hospitals and community service initiatives (e.g., building ice rinks) enhance brand image.

• Integrated Marketing Communication: Ensuring consistency across marketing platforms.

Places

• Channel Marketing Types:

  • Direct: Factory to consumer.

  • Indirect: Various levels including wholesaler and retailer.

Wholesalers

• Break down products into small bundles for easier distribution.

Types of Retailers

1. Store Retailers:

   • Category Killers: Large specialty stores that dominate their category (e.g., Home Depot for home improvement, Best Buy for electronics).

   • Convenience Stores: Small retail outlets that sell everyday items and provide easy access (e.g., 7-Eleven).

   • Department Stores: Large retail establishments that offer a variety of goods divided into specialized sections (e.g., The Bay).

   • Discount Stores: Retailers that offer products at lower prices than traditional department stores (e.g., Dollarama).

   • Outlet Stores: Shops that sell discounted products from well-known brands (e.g., discounted items from various brands).

   • Specialty Stores: Stores focusing on specific product categories (e.g., La Senza for lingerie).

   • Supermarkets: Large self-service stores selling groceries and household goods (e.g., Loblaws).

   • Supercenters: Very large stores that combine a supermarket with a full-line discount store (e.g., Walmart).

   • Warehouse Clubs: Membership-based retailers offering bulk products at discounted prices (e.g., Costco).

2. Non-Store Retailers:

   • Retailing conducted without a physical storefront, featuring online sales and remote business models (e.g., Amazon, Multi-Level Marketing (MLM)).

Distribution Strategy

• Intensive Distribution: Available everywhere.

• Selective Distribution: Limited retailers.

• Exclusive Distribution: Few select locations.

Transport Modes

• Rail

• Ship

• Truck

• Plane

• Pipeline

Price

• The only profit-generating factor in the 4P framework.

Pricing Strategies:

1. Penetration Pricing: Attract customers with low prices.

2. Everyday Low Price (EDLP): A policy introduced by Walmart to maintain low prices consistently.

3. High/Low Pricing: Offers low initial prices to attract buyers and higher prices later.

4. Loss Leader Pricing: Price certain products low to drive sales of other items.

5. Prestige Pricing: Set high prices for luxury items to enhance perceived value.

• Profit Margin: The difference between the cost and selling price.

Environmental Scanning

• Factors to Monitor:

  • Competitive landscape

  • Economic conditions (impact of recessions)

  • Social and cultural trends

  • Technological advancements

  • Political and legal frameworks

  • Global market considerations (e.g., international expansion)

Consumer Behaviour (More Emotional)

• Different people buy in different ways, influenced by:

  • Cultural: Purchase decisions based on beliefs, values, and social class.

  • Social: Strong influence from family, friends, and reference groups (celebrities, for example).

  • Personal: Demographics (age, location) and personality affecting choices.

  • Psychological: Learning experiences, motivation, attitudes, and perceptions.

Consumer Decision Making Process

1. Need Recognition: Identifying a reason for purchase.

2. Information Search: Researching online and in-person.

3. Evaluation of Alternatives: Listing pros and cons of options.

4. Purchase Decisions: Final decision on what to buy.

5. Post-Purchase Behaviour: Evaluation of the purchase after it’s made.

Business Buyer Behaviour (More Rational)

• Criteria include:

  • Size of the business.

  • More structured and rational criteria for purchasing.

  • Specific criteria based on objective standards.

  • Input from multiple internal sources to reduce personal bias.

  • Formal purchasing process common in business settings.

  • Frequently seek customized goods due to larger quantities needed.

Marketing Research

• Purpose: Gathering, interpreting, and applying information to uncover opportunities and challenges.

Types of Data:

1. Primary Data: Newly collected information through surveys; customized, fresh, but more expensive.

   • Methods:

     • Observation Research: Includes scanner data, traffic counters, and garbage analysis.

     • Survey Research: Interviews to gain behaviour insights.

2. Secondary Data: Existing data that is often cheaper but may be vague and outdated; publicly available to competitors.

The five pillars of business

·       Foundation of business

·       Marketing (chapters 11-12-13): sales, branding (design), advertising social media, consumer behaviour and surveys

·       Finance: all things related to money, loans, etc

·       Strategy: all things greater than 1(long-term code, things that are long-term initiatives and will work on for over 1 year), like a move that is game-changing, so think long-term

·       Human resources: we need people; how we lead, motivate, coach, train, hire, give incentives such as bonuses or decreases, salary raises, fire people

·       Operation: the administration, the making of the product or service

*Know them by hurt, apply them given a context, and develop them

Exam questions (pay attention to subtitles):

è What do you look for in a partner:

-A reliable partner

-A loyal, trustworthy partner

-A creative person

-Someone who completes you, complimentary skills

-They have something you lack

-Connections

-Similar vision

-Someone who challenges you, makes you grow, different mindse

The History of Business

Key Eras:

1. Industrial Revolution (1700 – mid 1800s)

   • Emergence of Industrial Titans

   • Mass Production and Factories

   • Work Specialization for efficiency

   • Wealth creation leading to an increase in living standards

   • Concerns of manipulation and competition; exploitation in the workforce

   • Introduction of the assembly line refining production and boosting productivity gains, thereby decreasing costs.

2. Production Era (Early 1900s)

   • Focus on mass production methods to increase output.

   • Characterized by a hard sell approach without customer focus.

3. Marketing Era (1950s)

   • Shift towards consumer power and growth in consumerism.

   • Emphasis on product differentiation and the importance of customer focus in marketing strategies.

4. Entrepreneurship Era (Second half of 1800s)

   • Rise of the entrepreneur as key players in the business landscape.

   • Increased use of technology to facilitate business processes.

5. Relationship Era

   • Importance of building long-term relationships with customers.

   • Focus on satisfying customers and integrating feedback into business practices.

Acquisitions and Mergers

• Acquisitions: When one firm buys another firm.

• Mergers: Two companies agree to become one organization.

• Corporations seek:

  • Growth opportunities

  • Operational efficiencies

  • Competitive advantage.

The Five Pillars of Business

• Marketing: Encompasses sales, branding, advertising (especially on social media), consumer behavior, and market surveys.

• Finance: Relates to money management, including loans, budgeting, and financial analysis.

• Strategy: Involves long-term planning (over one year) focusing on significant moves that alter business direction and enhance competitive advantage.

• Human Resources: Manages workforce aspects—leadership, motivation, training, recruitment, and performance incentives (bonuses and raises) while also handling employee exits.

• Operation: Refers to the administration and processes involved in creating products or delivering services.

Starting Your Business from Scratch

Key Pros:

• It’s all you: Your concept, your decisions, your structure.

• No inherited mistakes: You don’t have to deal with the prior owner’s bad decisions.

Key Cons:

• High pressure: It’s all on you, which can be stressful.

• Credit challenges: It can be hard to get financing.

• Logistical difficulties: Building systems from the ground up can be complex.

• Time and effort: It takes significant time, money, and effort to build a customer base.

Buying an Established Business

Key Pros:

• Established structure: The concept, organizational structure, and operating practices are already in place.

• Established relationships: You benefit from pre-existing relationships with customers and suppliers.

Key Cons:

• Lack of personal touch: Working with someone else’s idea may not be fulfilling.

• Inherited issues: You may inherit old mistakes that need rectifying.

• Easier financing: While financing is less of a challenge, you may face higher entry costs.

Buying a Franchise

Key Pros:

• Brand partnership: You partner with an established brand which can drive initial customer interest.

• Management support: Possibility of assistance with management and financing from the franchisor.

• Low failure rate: Franchises generally have a lower failure rate compared to independent startups.

Key Cons:

• Limited creativity: There is less opportunity for creative freedom in business operations.

• National brand risks: You can be impacted by mistakes made by the national brand.

• Cost implications: The purchase price and ongoing royalties can be steep, impacting profitability.

Business Plans: The Road Map

Components of a Business Plan:

1. Executive Summary: A concise overview of the entire business plan, highlighting the key points and objectives.

2. Description of Business: Details about what the business does, its structure, mission, and vision.

3. Competitive and Industry Research: Analysis of the industry landscape and competitors to understand the market position and challenges.

4. Marketing Strategies: Outline of marketing approaches to reach target audiences and enhance brand visibility.

5. Operating Procedures: Clear guidelines regarding the day-to-day operations and processes of the business.

6. Personnel: Information about the team, including roles, responsibilities, and experience of key players.

7. Financial Projections: Forecasting of revenues, expenses, and profitability to provide a financial outlook for the business.

Secondary Data

• Definition: Existing data that has already been collected.

• Cost: Generally lower cost compared to primary data.

• Specificity: May not be specific to the researcher's needs.

• Timeliness: Frequently outdated, which can affect relevance.

Primary Data

• Definition: New data that is compiled directly by the researcher.

• Cost: More expensive to gather due to resource requirements.

• Customization: Tailored specifically to the researcher's needs.

• Timeliness: Fresh and up-to-date information.

• Availability: Generally proprietary, meaning it is not available to competitors unless shared.

Primary Research Tools

Observation Research

• The researcher does not directly interact with the research subject.

• Methods:

  • Scanner data

  • Traffic counters

  • Garbage analysis

Survey Research

• The researcher does interact with the research subject.

• Methods:

  • Questionnaires

  • Interviews

  • Focus groups

A product is anything a company offers to meet customer needs and wants, encompassing both goods and services.

Services: A Product by Any Other Name…

Most services embody these qualities:

• Intangibility: Services cannot be touched or owned, making them intangible compared to physical products.

• Inseparability: Services are produced and consumed simultaneously, meaning the provider and the service cannot be separated.

• Variability: Service quality can vary based on who provides the service, when, where, and how it is provided.

• Perishability: Services cannot be stored for later use; once time has passed, the opportunity to provide the service is lost.

Product Classification

Consumer Product Categories:

• Convenience Products: Easily accessible items that consumers purchase frequently with minimal effort (e.g., snacks, household items).

• Shopping Products: Items that consumers compare based on quality, price, and style before making a purchase (e.g., furniture, clothing).

• Specialty Products: High-end luxury items for which consumers have a strong preference and for which they will make a special effort to purchase (e.g., luxury cars, designer goods).

• Unsought Products: Goods that consumers do not actively seek out and may not think about until a need arises (e.g., life insurance, funeral services).

This classification aids businesses in targeting their marketing strategies effectively based on the consumer's purchasing habits.

Integrated Marketing Communication: Consistency and Focus

• Definition: Integrated marketing communications involve the coordination of messages across multiple promotional platforms to ensure that a unified impression is created in the customer’s mind.

• Goals:

  • Coordinate Promotional Messages: Ensuring that all marketing communications deliver a consistent message.

  • Create a Unified Impression: Aim to form a cohesive brand image that is recognized and appreciated by customers.

  • Identify Key Points of Contact: Recognize and optimize the interactions between the product and the target market to enhance customer engagement and satisfaction.

Features and Benefits

• Product Features: Specific characteristics of a product that define its attributes and functionality.

• Customer Benefits: The advantages that customers gain from specific product features, emphasizing how the product meets their needs or solves their problems.

Factors of Production: The Building Blocks

• Natural Resources: Raw materials that are used to produce goods and services.

• Capital: The tools, equipment, and facilities used in the production of goods and services.

• Human Resources: The labor force; the people who provide their skills and expertise in the production process.

• Entrepreneurship: The initiative and risk-taking required to create and manage a business.

• Overview: Businesses rely on some combination of these factors. Entrepreneurial activity can kick-start an economy by harnessing the other factors of production.