For this assignment, I’m a marketing consultant and I will be giving advice to Mr Johnson who wants to open up a fast food restaurant in a large urban area of South London where he lives. I’ll have to outline the types of information he might need and produce a research plan which should include: • The research objectives and what areas the research will cover • What research methods he could use • Which existing sources of secondary information he might use • What new primary data he needs to collect, and Design a questionnaire, which would be used in gathering suitable information. I’ll then have to conduct comprehensive market research using the designed questionnaire and interpret the results of the market research in such a way that Mr Johnson will understand. I’ll produce a briefing paper, examining what external environmental factors I consider Mr Johnson needs to bear in mind, which may affect the business and how these factors will directly or indirectly impact on the business.
I’ll lastly prepare a detailed plan for Mr Johnson, which will include; the product strategy, the pricing strategy, the promotional strategy, the distribution strategy and the people, physical evidence and process strategies within the context of my plan. METHODOLOGY/PROCEDURE For this assignment I’ll be using two types of research which are primary and secondary research. Primary research: This means asking someone for their views or opinions. I’ll be using questionnaires to find out people’s views. Secondary research: Secondary research relates to information that already exists, rather than creating your own.
The Research paper on History, Theory, & Research Strategies
Human development is the study of all aspects of constancy & change throughout the lifespan. Theories lend structure & meaning to the scientific study of development. This chapter provides an overview of philosophical & theoretical approaches to the study of human development from medieval to modern times & reviews majore research strategies used to study human behavior & ...
I’ll be using information from the internet, text books. FINDINGS Under this section you are going to find all the findings of my research. Marketing is the management process of identifying, anticipating and focusing on the needs of actual or oriented customers whether for profit or not, while also encouraging customers to make further purchases and to recommend the products and services of the organisation. Marketing describes both a management strategy that focuses on customer satisfaction, and series of functions such as advertising, product development, selling and market research.
Anybody responsible for marketing within an organisation must be able to identify the needs of both potential and existing customers. It is also necessary to be able to anticipate future trends and developments which could influence customers’ requirements; for example in this case Mr Johnson would need to spend more on advertising to attract customers thus increasing his customer base. Marketing involves constantly reviewing all aspects of a products or service in order to ensure that it continues to satisfy the potential customer’s requirements.
This means having the right product or service, available at the right price and at the right time and place. An organisation can only claim that its marketing is successful when customers make repeat purchases or are prepared to make recommendations about the organisation’s products or services. E. 1 YOU CAN APPROPRIATELY IDENTIFY, COLLECT AND USE PRIMARY AND SECONDARY DATA RELEVANT TO THE MARKETING STRATEGY Using marketing research I have gathered, analysed and collected information that will helpful when I’m advising Mr Johnson.
The market research information would help Mr Johnson to recognise and respond to market opportunities and to develop suitable products to meet market needs. It will enable him to find out which goods and services people want, the price they are prepared to pay, where they prefer to buy the product, and how products should be promoted. I carried out market research because Mr Johnson wants to start a business of his own and the research helped me find out; the size of the market and how customers will respond to his products. By using marketing research, these are some of the questions that Mr Johnson could be opposing. Where does the target population live? Target population is the segment of the market that the product is aimed at and who is expected to show most interest in it. • What price are potential customers prepared to pay? • How often do they buy the products and where do they buy them? • What qualities do they think are most important in these kinds of products? • What similar products are they buying and why? Businesses can take one of two approaches to market research: 1) They can assume that their products will automatically sell and high profits for the business. This is known as product orientation. ) They can also carry out research to check whether the market wants their products and adjust the marketing mix to meet this demand. This is known as market orientation. By carrying out market research, I identified the key factors which relate to customer satisfaction at three levels. These are: • The essential or core benefits associated with a products – that is, what the customer seeks to obtain by buying it • The product specification, including branding, packaging and quality • The additional benefits associated with after-sales service, advertising, customer service, financing and delivery.
The Term Paper on Marketing Notes Information Research Market
Chapter 1 - Marketing In a Changing World What is marketing - Creating customer value and stratification are at the very heart of modern marketing thinking and practice. Market Defined - Markets always focus at satisfying customers needs - Marketing: A social and managerial process by which individuals and groups obtain what they need and want through creating exchanging products and value with ...
MARKETING OBJECTIVES Mr Johnson will have to set himself one or more objectives. Business objectives are aims of what a business wants to do. Objectives should be SMART – specific (clear), measurable (they can be calculated), agreed (achievable/practical), realistic (realistic) and time related (deadlines).
Mr Johnson’s objectives are explained below; To make profit Profit is the difference between what a business has earned and what it has spent over a given period. Making profit is the main objective of Mr Johnson as without profit then his business will not last very long. Maximising sales and improving quality
I suggest that when Mr Johnson starts trading he should aim to maximise sales, which means he will want to sell as many goods as possible. He could do this in many ways such as by reducing the price of its products, spending more on advertising and promotion or offering additional services to customers. Being environmentally friendly Once he starts his business I advise Mr Johnson to be serious about environmental concerns, such as pollution, waste disposal, recycling and energy use. He will have to be aware that the public cares about ‘green issues’ and that no business can afford bad publicity for being environmentally unfriendly.
The Business plan on Starting A Business People Plan Money
Introduction More and more people are beginning to open their minds to new business ventures. It seems like it is becoming the popular move. By opening a business there could be huge profit to be made, depending on the market. On the other hand, there are risks and losses that may occur as well. It is said that there are two reasons why people start a business. The first reason is because they ...
Providing a highly competitive service and producing competitive products Mr Johnson will have to try to produce the best products and provide the best services that he can. This is the way that he will retain his consumers and, through this, meet his main objective of making profit RESEARCH METHODS Different methods are suitable for different types of data and depend on who and what the data is being collected for and where the data is being collected from. Each method can be evaluated to consider its suitability against these following criteria; – Cost of collection Ease of access Is the data readily available? Can people be contacted easily? – Time/speed How long does it take to collect the data? How urgently is it needed? – Likely response by person being surveyed Is the survey intrusive? Is it inconvenient? Does it affect the way they behave or answer? – Accuracy and reliability 1) Primary research This is described as the gathering of fresh information, specifically tailored to the business’ own requirements. To obtain additional market knowledge, I made fresh enquiries, such as through the use of surveys, questionnaires and observation.
For this assignment I’ve chosen to use a questionnaire and observation as my primary research methods for fast food products. I’ll create a clear set of questions that I need to know the answers to. I’m also aware that if the questionnaire is kept fairly simple, I’ll obtain the answers that matter. There are different types of primary research methods which are: . Questionnaires . Conduction surveys . Observation * Questionnaires A questionnaire collects data using a set of questions that require fairly simple and short answers. Many of market research methods I have mentioned above depend on the use a questionnaire.
I used a questionnaire which provided me with a great deal of data in a relatively short time. * Conducting surveys Surveys are one of the most common ways used to collect market research information. They use market research methods e. g. various types of interviews to find out how respondents react to a range of issues often contained within a questionnaire. Surveys can be conducted through the following methods; – Personal interview – Postal surveys – Telephone surveys – Discussion groups The personal interview is generally regarded as the most effective method of conducting a survey.
The Term Paper on Annual Survey Of Philippine Business And Industry
Final results of the 2009 Annual Survey of Philippine Business and Industry (ASPBI) conducted nationwide recorded a total of 14,998 Hotel and Restaurant establishments in the Philippines. As shown in Figure 1, Restaurants, bars, canteens and other drinking and eating places garnered the highest number of establishments at 13,348 or 89.0 percent. Hotels, camping sites and other provisions of short- ...
It generally produces the most response. A personable and experienced interviewer acquires a technique which encourages participation and results in more complete and accurate answers. Personal interviews are, however, are an expensive method of conducting surveys. Probability and random systems are particularly expensive, as interviewers must revisit respondents who are not at home when they first call. Postal surveys are less expensive, but the response rate is very poor – a large number of questionnaires have to be mailed to obtain a sufficient number of replies to produce reliable results.
Because there is no interviewer on hand to assist with any difficulties, mail questionnaires may be especially laid out, with questions and instructions clearly expressed in plain language. People are more likely to respond if they feel an affiliation with the purpose of the survey; e. g. if it is about a subject on which they have strong views. Telephone interviews are less expensive than personal interviews and more likely to elicit a response than mail questionnaires. They are generally representative, as over 85% of families have a telephone.
However, there is a danger of bias, particularly if it is found that only a certain type of person is willing to provide personal information to an unknown and unseen caller. Discussion groups bring together a representative group of people to discuss their tastes and preferences about a particular product or service or to give their general views on household consumer items. Usually respondents are paid to attend and take part in focus discussion groups. * Observation Observation is far more common than people can imagine. It can be a very seful method of finding out how people buy products, where they shop, what appears to interest them, etc. it is frequently used to find out what customers actually do, but it will also be used in wider marketing research as these examples show. – Observing how customers move around a store so that the business can decide where to place its goods, customer service desks, checkouts, etc – Observing competitors’ advertisements on TV to decide how to change the business’s own advertising approach – Observing the number of people who use certain parts of a town centre in order to enable the business on deciding the best location for its new shop
The Business plan on Business Report Pay Tax Clients
Business studies Final report Re; Ronald smith & co Key business functions: the firm offers accounting and Taxation services together with financial planning. The firm Ronald smith and co needs to generate approximately $750 a day to cover the expenses like electricity, wages, loans and other business effecting costs. One of the most important is Internet connection without this the business ...
Some benefits of observation – It shows what people do rather than what they say they do – It can be carried out without the customers’ knowledge, so the conducting of the survey does not affect them or change the way they behave Some important drawbacks and limitations of observation – It may show how, where and when people buy products buy not why they buy them – If people know that they are being observed, they may object as an invasion of privacy – It may only give partial information, e. g. where a good site for a shop might be but not about the price, planning restrictions, etc
THE PRIMARY RESEARCH METHODS THAT I USED TO HELP ME ADVISE MR JOHNSON I used a questionnaire, postal survey and observed customers’ behaviours. Questionnaire Some benefits I had when I used a questionnaire – Most people were prepared to answer them – The questionnaire provided data in a form that was easy to analyse and draw valuable conclusions from – It was much cheaper and was carried out more quickly than the interviews – I didn’t need any particular skills to carry out the questionnaires. The problems I encountered when conducting the questionnaires – The questions n my questionnaire couldn’t allow candidates to give detailed answers and that meant that I couldn’t find out the real reasons behind consumers’ choices. Postal survey I didn’t encounter any benefits when I carried out the postal survey but I had a big problem with the survey. I did 74 questionnaires but only 50 were filled in. This was because some of the 14 questionnaires that I sent through post to some of my friends who live in south west London were not returned to me and some people were not willing to fill in my questionnaire on the streets.
These are the reasons why I did not fill the 74 questionnaires that I set out to do. * Observation I went to a KFC and I observed the way their consumers buy products. The most interesting thing I observed was that there was a long queue in the restaurant, so most of the consumers left the restaurant and went to the Mc Donald’s that is right next to KFC. Based on my observations, I’ll advise Mr Johnson to put at least 3 – 5 tills in his restaurant to avoid long queues as consumers don’t like waiting long for their food.
The Essay on The Causes Why People Eat Junk Food
Why people do not stop eating junk food? ‘’Junk food A high-calorie food that is low in nutritional value.’’(Unknown). For better or for worse is now available all over the world. We see it almost everywhere, like when we go to the grocery, stores, Junk-Food restaurants, on television, etc. usually looking very tempting, appealing and desirable for people to buy it. According to Dupel Francine ( ...
This will prevent the consumers form going to other fats food restaurants. Benefits I had when observing consumers’ behaviour – It helped me identify what people actually do rather than what they say they do I didn’t encounter any problems with observing people because it only took me about 20 minutes to see what I saw. I advise Mr Johnson to use the same methods I used to carry his market research to carry out his market research in future as both the questionnaire and by observing customers’ behaviour give real and accurate results.
However I don’t advise him to use the postal survey as it will take him long to get the results and the some of the people will not even bother filling the questionnaires that he will have sent out to them. The new primary data that I collected for Mr Johnson is what exact age group visits fast food restaurants which helped me identify his target audience, which part of South London most people that visit fast food restaurants lived and whether they preferred the fast food restaurants on high streets or in residential states, this gave me an idea of where Mr Johnson to locate his restaurant.
I also found out how many people eat fast food and how many are vegetarians. I found out what type of food people like, food like Chinese, Indian, Mexican, English and Caribbean and what their favourite fast food is. This information helped me to advise Mr Johnson on what type or kind of food he should put on his menu. I found out information about how much people are willing to pay for the main fast foods, such as sandwiches, burgers, pizza and fish & chips which will enabled me to advise Mr Johnson on how to price his products. 2) Secondary research
All secondary research comes form published sources. The data, collected for other purposes, is presented in a form that other people can use: written, kept on video, stored electronically or presented in diagrams, etc. The secondary research methods that I’ve decided to use are text books, the internet and newspapers. I advise Mr Johnson to use the above methods as they can give him so much information about the fast food market; especially the internet. E. 2 A CLEAR ANALYSIS OF THE EXTERNAL INFLUENCES AFFECTING THE DEVELOPMENT OF THE MARKETING STRATEGY
I examined the business environment which will help me develop an appropriate marketing strategy for Mr Johnson. Developing an appropriate marketing strategy will involve creating the best possible match between the external environment and the internal capabilities of Mr Johnson’s business, once he starts trading. Like all businesses, Mr Johnson’s business will be affected by factors beyond its control, i. e. factors in their external environment. For example changes in interest rates, exchange rates or the law can have a ignificant effect on a business’s market or its costs. The external environment will therefore be a major influence on Mr Johnson’s business’s behaviour. He will need to anticipate external change and be ready to react when it occurs. The ability to make the right choices when the external environment has changed can be a major factor determining Mr Johnson’s business’s survival and success. I’m going to analyse the external influences that Mr Johnson should be aware of once he starts his business. PESTED ANALYSIS
The PEST analysis will focus on the Political, Economic, Social, Technological, Environmental and Demographic factors in the external environment of Mr Johnson’s business. It will examine the impact of all the relevant factors in these different areas on Mr Johnson’s business’s behaviour. I used the PESTED analysis to advise Mr Johnson because it provides an easy method of classifying the various factors in the external environment. 1) Political & Legal factors Mr Johnson’s business decisions will be influenced by political, fiscal (taxation) and legal decisions.
This involves the way in which the government will regulate his business and the extent to which it will intervene in markets. Regulation covers a variety of areas, including consumer protection, employment law and competition policy. Intervention may be in the form of direct provision or changes to the legal environment. The government in all countries is a major employer and a significant purchaser of goods and services. It therefore has a direct effect on the economy, as well as influencing Mr Johnson’s business decisions through its taxation and legal policies.
The government also provides goods and services itself, although the extent of this provision varies form country to country. Political change from one party to another could either boost or lower the sales of Mr Johnson’s fast food restaurant. Also the budget could have an influence on Mr Johnson’s products and sales. This may affect the way he will price his products, especially if there is a change in employment figures. There are many UK and EC regulations designed to protect the consumers to be harmed by products and sellers to be misled by suppliers.
This would be an advantage to Mr Johnson as the government can protect the environment in which the fast food is sold, and he has to confirm to health and safety standards. To ensure full and fair competition, legislation regulates competition in the private sector in order to prevent one or more supplies domination a particular market against the interest of customers. It is important that businesses like fast food restaurants and other businesses compete on equal terms.
One of the Legal factors that can affect Mr Johnson’s business is the restrictions on the amount of fat that is allowed to be used on these types of food. Another Legal factor is that he must pay income and corporation taxes as it is by law and if he doesn’t then the government will order him to shut his business down. Income tax is a tax assessed on gain made by an individual or entity and corporate tax is the tax owned by a company according to the tax regulations and its net profit before tax. Corporation tax on profits ? per year (unless stated) | |2004-05 | |2005-06 | | | |Starting rate: 0% | |? – ? 10,000 | |? 0 – ? 10,000 | | | |Marginal relief | |? 10,001 – ? 0,000 | |? 10,001 – ? 50,000 | | | |Small companies’ rate: 19% | |? 50,001–? 300,000 | |? 50,001–? 00,000 | | | |Marginal relief | |? 300,001–? 1,500,000 | |? 00,001–? 1,500,000 | | | |Main rate: 30% | |? 1,500,001 or more | |? ,500,001 or more | | | |Non-corporate distribution rate | |19% | |19% | | |
SOURCE: http://www. hmrc. gov. uk/rates/corp. htm Mr Johnson needs to know that he will have to work out his own tax liability, pay his tax without prior assessment by the Inland Revenue and be liable to penalties if he does not deliver a return by the statutory filing date, normally 12 months after the end of the accounting period. He should also be aware that Corporation Tax is due for ‘Accounting Periods’ which are normally 12 months long.
Accounting periods can, in some circumstances is shorter than 12 months but never longer. Below are the Income Tax allowances that can be useful to Mr Johnson. |Income tax allowances |2004-05 (? ) |2005-06 (? ) | |Personal allowance |4 745 |4 95 | |Personal allowance for people aged 65-74 |6 830 |7 090 | |Personal allowance for people aged 75 and over |6 950 |7 220 | |Income limit for age-related allowances |18 900 |19 500 | |Married couple’s allowance for people born before 6 April 1935 |5 725 |5 905 | |Married couple’s allowance – aged 75 or more |5 795 |5 975 | |Minimum amount of married couple’s allowance |2 210 |2 280 | |Blind person’s allowance |1 560 |1 610 | SOURCE: http://www. hmrc. gov. uk/rates/it. htm
Mr Johnson should know about the employment discrimination laws which seek to prevent based on race, sex, religion, national origin, physical disability, and age by employers. There’s also a growing body of law preventing or occasionally justifying employment discrimination based on sexual orientation. Discriminatory practices include bias in hiring, promotion, job assignment, termination, compensation, and various types of harassment. The main body of the discrimination laws is composed of federal and state statues. The Employment Rights Act 1996 This Act summarises the main rights which have been agreed over several years in one act of parliament.
The Act states that; *All employees must receive written details of their employment terms within two months of starting work, normally in a contract of employment. A contract is an agreement between people and organisations to deliver goods or services, or to do something on jointly agreed terms. Although a contract of employment doesn’t have to be made in writing, the law requires a summary of the most important terms and conditions in the contract to be given to the employee, such as the names of the employer and employee, date when employment began, scale of rate of pay, job title, hours of work, work location, etc. *All female staff can be allowed off work if at all they are pregnant and are allowed to return to work under the same terms and conditions as before [pic] Employees have the right to take their complaints to an employment tribunal in case they are unfairly dismissed by their employer. An employment tribunal is an independent body set up to provide an inexpensive and speedy method of determining disputes between employers and employees. The tribunal can order a company to reinstate the employee or award compensation. *An employee can not be dismissed for acting as a trade union official or health and safety representative. Employees must be let off work for jury service or ante-natal care Examples of employment rights discrimination When an employer is paid less than the rest of his/her colleagues can be classed as discrimination The Sex Discrimination Act 1975 The first thing to note that sex discrimination is illegal.
In employment this act applies to recruitment and selection of jobs plus promotion, training, the way you are treated in a job, dismissal and redundancy. The sex discrimination act states that one must not be discriminated against because of your sex. Yet even though the act was passed in 1975-refined in 1986-men’s average income in the UK is almost twice as much as women’s. That is sex discrimination on a grand scale. A person can be discriminated on grounds of gender on grounds of gender through two different kinds of discrimination; – Direct discrimination = when one gender is treated unfairly. For example when a job indicates that its only men that are supposed to apply for it. Indirect discrimination = when conditions that appear to apply to every one actually discriminate against you on the grounds or your sex. For example, an advert saying that only people more than 6 feet tall can apply for a certain job would exclude far more women than men, so this would therefore count as indirect discrimination. Examples of direct sex discrimination *If a woman is allowed time off to look after her sick child but a man, in similar circumstances, is refused and the refusal is on grounds of his sex, this will be direct sex discrimination. *If a man is ‘cold shouldered’ by his employer because he is taking family leave and he can show that this would not have happened to a woman, this would be direct sex discrimination. Example of indirect sex discrimination
A woman is refused parental leave and the employer is arguing that it has a policy of not granting parental leave in her particular circumstances; or if she is granted leave but on return finds that she has been given less responsibility and excluded from meetings. The Race Relations Act 1976 This act makes it illegal for employees to be discriminated against grounds of their colour, race, nationality or ethnic religion. [pic] Direct and indirect discrimination apply again for the Race Relations Act 1976 for example in the UK when only white people have to apply for a certain job, when one is paid less than his/her colleagues because she/he is a certain nationality but English. [pic] Examples of racial discrimination *When a newspaper advert says that housing is available for “white” applicants only. When a black person answers a newspaper advert for an apartment, the landlord tells him that the apartment has already been rented and it turns out that the apartment was not rented, and the landlord later rents it to a white applicant who answers the same advert. *When a landlord evicts a white tenant from her mobile home because her black friends visit her there. The Disability Discrimination Act 1995 This act deals with discrimination against people with disabilities in employment, when obtaining goods and services or buying/renting land or property.
*It’s illegal for employers to treat a disabled employee less favourably than an able-bodied person whether in training, recruitment, promotion or dismissal unless it can be justified. [pic] A disabled employee who suffers discrimination has the right to take their complaint to an employment tribunal. *A disabled employee has the right to be provided with reasonable adjustment to their work places that will enable them to Be comfortable and do their jobs effectively. [pic] Examples of disability discrimination *When a landlord refuses to rent an apartment to a man because he is mentally retarded *When a landlord refuses to rent an apartment to a blind woman because she has a seeing-eye dog The Equal Pay Act 1970 (EPA) gives an individual a right to the same contractual pay and benefits as a person of the opposite sex in the same employment, where the man and the woman are doing: • Like work; or Work rated as equivalent under an analytical job evaluation study; or • Work that is proved to be of equal value. The employer will not be required to provide the same pay and benefits if it can prove that the difference in pay or benefits is genuinely due to a reason other than one related to sex. The EPA has been interpreted to cover indirect sex discrimination as well as direct discrimination i. e. where the pay difference is due to a condition or practice which applies to men and women but which adversely affects a considerably larger proportion of one sex than the other and it is not justifiable, irrespective of sex, to apply that condition or practice.
So, for example, the fact that a woman is paid a lower hourly rate than a man because she works part-time and he works full-time is unlikely to be a good defence to an equal pay claim. The EPA applies to England, Wales and Scotland. The work week hours The average workweek is five days, eight hours a day, for a total of 40 workweek hours. After the 40 hours have been worked, anything over must be paid in overtime wages. Nevertheless, people who do not work the standard workweek, must still be paid minimum wage and must still be compensated for overtime hours. Time spent travelling during work must also be accounted into the workweek and employers must be compensated for mileage costs (commuting time does not count).
Further, workers who arrive early or stay late, are not necessarily paid for those hours unless the employer agreed to payment. Likewise, employers who are “on call” and must remain on the premises must be paid for those hours as well. Also, lunch and regular breaks over 20 minutes do not count toward the 40 hour workweek and do not legally have to be compensated (many companies provide this compensation nevertheless. Please check your employee handbooks).
Employers who have to stay at their desks or perform work during breaks, however, must still be paid. The National minimum wage The National Minimum Wage will increase again in October 2005.
The Government has recently responded to the recommendations made in the Low Pay Commission’s 2005 Report on the National Minimum Wage. The Government have accepted the following main recommendations: • The adult rate of the minimum wage (for workers aged 22 and over) should increase from its present hourly rate of ? 4. 85 to ? 5. 05 in October 2005, and to ? 5. 35 in October 2006. The 2006 increase is subject to confirmation by the Commission in February 2006, to check that the economic conditions continue to make it appropriate. • The development rate (for workers aged 18-21 inclusive) should increase from the present hourly rate of ? 4. 10 to ? 4. 5 in October 2005 and ? 4. 45 in October 2006. NB: The development rate can also apply to workers aged 22 and above during their first 6 months in a new job with a new employer and who are receiving accredited training. • The Government should invite the Low Pay Commission to review the operation of the 16-17 year old rate of ? 3 an hour and to report in February 2006, with recommendations for any subsequent increases. 16 and 17 year olds rate The Government accepted the Low Pay Commission’s recommendations for a new rate for 16 and 17 year olds (above compulsory school leaving age) in their 2004 report. • ? 3. 00 per hour from 1 October 2005
NB: 16 and 17 year old apprentices will be exempt from the new young workers rate. SOURCE: http://www. state. sc. us/schac/case_examples_of_discrimination. htm Types of businesses There are five main forms of business organisation in the private sector that Mr Johnson should know about. They are: – Sole traders – Partnerships – Private limited companies – Public limited companies – Co-operatives Sole traders
This is the most common form of business organisation. It is a business owned and operated by one person although the sole trader can employ other people. The owner is called the sole proprietor. I suggest Mr Johnson should be a sole trader as there will be little legislation for him to worry about when he sets up the business, he will be his own boss. He will have complete control over his business. He will not need much money to set up the business. The main reason why I’m advising Mr Johnson to set up a sole trader business is that he will have incentives to work hard as he will be able to keep all the profits that he will be making, after he has paid tax.
The drawbacks that I’m going to let Mr Johnson be aware of are that he will have no one to discuss business matters with as he will be the only owner and he will not have benefits of LIMITED LIABILITY which means that his business accounts will not be separated from his own accounts, which also means that his business will not be a separate legal unit. He will therefore be fully responsible for any debts that his business may have. Below I’m going to explain a partnership in detail in case Mr Johnson might want to consider it as well. I’m not explaining private and public limited companies and co-operatives as Mr Johnson may not have the kind of money needed to start these up. Partnerships
Partnerships is a group or association of between two and 20 people who agree to run a business together. The partners will contribute to the capital of the business, will usually have a say in the running of the business and will share any profits made. Some advantages of a partnership include: . More capital could now be invested into the business from the partners’ savings and this would allow expansion of the business. Additional taxis could now be purchased. . The responsibilities of running the business are shared . All partners are motivated to work hard because they would both benefit from any profits made. In addition any losses made by the business would now be shared by the partners. Some disadvantages include: The partners don’t have limited liability. If the business fails then creditors could still force the partners to sell their own property to pay for business debts. . Partners can disagree on important business decisions and consulting partners takes time. 2) Economic factors Though the economic environment is influenced by domestic economic policies, it is also dependant upon world economic trends. Mr Johnson’s business will be affected by the economic environment which includes factors such as interest rates, exchanges rates, inflation recessions and economic growth. A change in economic conditions can lead to a change in both demand and supply conditions of a product.
On the demand side, changes in economic conditions can influence consumer’ income whilst taxes can influence the relative prices of goods. On the supply side, increasing interest rates and inflation will affect Mr Johnson’s business costs. A recession occurs when the national income is falling. This means that during a recession the demand for Mr Johnson’s goods and services will fall. This in turn is likely to lead to fewer sales and less output. If a recession is prolonged it is likely to lead to losses and plant closure; so I will advise Mr Johnson to cut prices in order to boost sales. In the short term it is likely to lead to less overtime and less of additional temporary staff. Mr Johnson’s products will be less sensitive to the level of national income.
They will not follow the same trend as national income – even a recession people will tend to buy fast food which means that fast food is income inelastic, as it is not sensitive to income changes. The precise impact of a recession will depend on the extent to which income has fallen and how long it takes before the economy starts to pick up. During a recession a firm can change the product mix to produce a lower priced, more basic product range and they may try to cut costs so they reduce the price and still maintain their profit margins An interest rate is the ‘cost of borrowing money’. A decrease in the interest rate will usually lead to more demand in the economy. With a lower cost of borrowing and a lower reward for saving, consumers tend to save less and spend more.
Lower interest rates also reduce households’ mortgage payments and increase the money they have to spend on other things. Lower interest rates will reduce Mr Johnson’s costs if he has he will have to repay any loans as a result, when faced with lower interest rates Mr Johnson’s can then think of expanding; this may also mean he’ll need to increase his labour input and recruit more staff. Demand for Mr Johnson’s products will be less affected by interest rate changes as they are inexpensive and people do not have to borrow to buy them on credit. An increase in the interest rate will increase the reward for savers and will make it more expensive to borrow. Individuals will be more tempted to put their money into banks to gain a higher rate of return.
They will be less eager to borrow money as the repayments will be higher. Therefore demand will fall, leading to less sales and possible redundancies if the fall of demand is less sustained. Firms may try to control costs to maintain their profits; they may also look to produce a more basic product range. To protect itself from an increase in the interest rate, a firm can try and arrange fixed rate loans. However, it is usually only possible to fix the interest rate for a limited number of years and this policy involves a risk; although fixing the rate means the firm’s is in a better position if the rates in the economy go up, there is also the danger that it will lose out if rates fall.
As it is difficult to predict what rates will do, fixing the cost of borrowing requires carefully thought. The chart below illustrates changes in the Bank of England’s base rate from September 2001 to April 2005. It shows an increase in the interest rate. [pic] Source: Bank of England http://news. bbc. co. uk/1/hi/business/4471611. stm Mr Johnson will also need to look out for his cash flow if the interest rates go up, and if it appears that he is spending more than earning, then I suggest he follows the following procedures: . Improve systems for paying suppliers. . Generate regular reports on receivable ratios and aging. . Establish and adhere to sound credit practices – train staff. . Increase sales Unemployment is a waste of resources.
If people are unemployed they are not working and so the economy a s a whole is not producing as much a s it could. If unemployment is high in a country, it may mean there is lack of demand in the economy. As a result, a firm may have to cut back on production, although in the short term it may be reluctant to reduce out put and so stocks are likely to increase. A firm may also have to reduce its staffing levels. Once again, it is unlikely to do this in the short term due to be negative effects on morale that making people redundant has, and because people may be needed again if sale improve. The table below shows the labour supply in Greenwich |Greenwich |Greenwich |London |GB | | |(numbers) |(%) |(%) |(%) | |All people | |Economically active |100,000 |72. 5 |74. 6 |78. 2 | |In employment |91,000 |66. 0 |69. 3 |74. 3 | |Employees |79,000 |57. 5 |58. 2 |64. 8 | |Self employed |11,000 |7. |10. 6 |9. 0 | |Unemployed |9,000 |8. 9 |7. 1 |5. 0 | As you can see from the table, there are more employed people in the community than unemployed people. I’ll still advise Mr Johnson to locate his business anywhere in Greenwich which will give majority of the 9,000 unemployed people an opportunity to work in the restaurant. Having high employment in the area is beneficial to Mr Johnson in a way that most people will be spending some of their money on fast food thus increasing profit for Mr Johnson’s business.
Inflation occurs when there is a sustained increase in the general price level. High levels of inflation can make UK firms uncompetitive if their prices are increasing more than those of their overseas competitors. The precise impact of inflation will depend on how rapidly prices are increasing and what is happening to competitor’s products. The faster the increase the more difficult it is for firms to plan and build in price increases to their forecasts and budgets. The graph below would be a useful starting point for Mr Johnson to help predict likely changes in the rate of inflation of the economy. It shows an increase in the inflation rate in the UK economy. [pic] Source: http://news. bc. co. uk/1/hi/business/4459637. stm Consumer Price Index (CPI) is a measure of the average change in consumer prices over time in a fixed market basket of goods and services. Retail Price Index (RPI) is an average measure of change in the prices of goods and services bought for the purpose of consumption by the vast majority of households in the UK. The business cycle The Interest rate policy and fiscal policy will have to be set accordingly. Within the UK the climate of the economy dictates how consumers may behave within society. Whether an economy is in a boom, recession or recovery will also affect consumer confidence and behaviour. [pic]
An economy which is booming is characterised by certain variables. Unemployment is low, job confidence is high, and because of this confidence spending by consumers is also high. This has an impact on Mr Johnson’s business in a way that he will have to be able to keep up with the increased demand if he is to increase turnover. An economy which is in a recession is characterised by high unemployment, and low confidence. In case of high unemployment I advise Mr Johnson to start spending low as he’ll be facing a tough time because consumers will not be spending as a result of the low disposable income. He’ll also need to cut back on costs. 3) Social factors
The social factors that will affect Mr Johnson’s business include the values and attitudes of society and the role of pressure groups. Growing awareness of environmental issues has affected what firms produce and what they manufacture. Some organisations are able to build on the image of their social responsibility and use it as an integral part of their product brand while other firms are more vulnerable to public criticism and must decide on how they react to this growing interest in social responsibility and corporate citizenship. 100% of the candidates that took part in my primary research prefer to eat out. This means that Mr Johnson stands a chance of having many customers once he starts trading. 90% of the participants were aged between 15 and 20.
This is the age group that necessarily eats fast food and Mr Johnson should be aiming at this type of age group. These days both men and women go out to work in the world of employment. This role has been accepted in society now; their roles have in a way become equal in society. The old fashioned way of thinking that men should go out to work and women should stay home and look after children, or cook food all the time has died down although in some religions such thinking is still in place. Having two people in the household, both the man and women working means that there is more income coming in which means that consumers will not have a problem with buying Mr Johnson’s products and will be able to afford them as they have enough income coming in.
If consumers do not have enough income they tend to settle for a substitute, which means a drink that is cheaper or would buy another drink instead. 4) Technological factors These involve the way in which goods are produced, as well as the product or service itself. Developments in technology have led to new way of selling, such as the internet, and completely new markets, such as digital television. In marketing goods and services, organisations must be aware of new materials as well as developments in manufacturing and business processes. At the same time, organisations have to look at the nature of their products and, in particular, their cost-effectiveness, as well as their performance in relation to the competition.
Factors might include; new technological processes, energy-saving techniques, new materials and substitutes for existing materials, better equipment and new products developments. The main technological factors that can affect Mr Johnson’s business are the use of ICT to order goods from suppliers and to keep records. Mr Johnson can use stock control systems which are able to respond automatically when new stock needs to be ordered. E. g. he can use a spreadsheet or database to keep a record of how much of each item there is in stock. As soon as this falls below the reorder level, the system will produce an alert reminding the purchasing department to order more. I advise Mr Johnson to use tills so he could monitor how many products he has sold in a time period.
The products he sells will be monitored on a database. The database will hold a record of the number of those products held in stock; the database will then reduce the number held in stock by one each time a product is sold. Mr Johnson will now know that the stock level has been reduced and when it was reduced, giving him an up-to-date record of the stock levels. This will allow his business’ database to create an order to replace the stock when the stock level reaches a minimum level that he sets. When the stock level reaches this minimum level an order to the suppliers is created and can be sent to the suppliers. This will make work easier for Mr Johnson, as well as his employees.
Generally I advise Mr Johnson to use the above forms of ICT systems in his business as ICT will help speed up the process of the things that take place day to day of the business e. g. transactions, communication between members of staff etc. Without ICT, Mr Johnson’s business will be running very slow, information will be incorrect, files will need updating and he might lose customers. ICT will also help to reduce the costs of making mistakes as it is fast, efficient & accurate where as doing things manually (without ICT) would result in a mistake being made and the cost of one mistake could cost the Mr Johnson’s business money. He can also put a music system in the restaurant so that customers can listen to music while they wait for their order. 3) Environmental factors 4) Demographic factors INFLUENCING CHANGE
When thinking about the external environment, it is important for Mr Johnson to bear in mind that these are factors which his business cannot control. Whilst he can change the price of his products, hire more people or even change his production process, he will have little influence over the external environment. Mr Johnson should know that he cannot easily change the exchange rate, alter public opinion, amend the law or age breakdown of the population. He must anticipate and react to external change. Faced with change in the external environment, Mr Johnson will need to consider the factors such as: – Is the business ready for change? – What resources does it have? – What is it trying to achieve? – How good is its management? – How long does it have to react? What is its product range? Mr Johnson will need to be constantly aware of possible changes in the external environment and, if possible, he will need to ensure the business is suitably prepared. Any change in the external environment will create opportunities, strengths, threats and weaknesses. SWOT ANALYSIS As a consultant I have used a SWOT analysis to show Mr Johnson where he will stand in the market when he starts the business. SWOT analysis is a tool for auditing an organisation and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
Strengths and weaknesses are internal factors and threats and weaknesses are external factors. The findings in the SWOT analysis will enable Mr Johnson to identify where he needs to focus his attention. Conducting a SWOT analysis will play a key role in Mr Johnson’s strategic planning. SWOT analysis for Mr Johnson |Strengths |Weaknesses | |Mr Johnson’s experience as a specialist in catering. |He has no experience running his own business. | |This is helpful as he has an idea on what the industry is like. |This is a problem as he doesn’t know any drawbacks of being a | |The fast food industry is growing. sole trader. Some of the drawbacks are that | |Operating in a fast growing sector will enable him to make |He perhaps has no managerial skills | |profit as majority of the people are employed and therefore |He is undecided on the location | |spend some of their money on fast food. | | |Opportunities |Threats | |He is getting or acquiring professional advice |Existing or potential competitors. |The fact that he’s getting advice from me is an opportunity as |These can be a threat as they could be producing better | |I’ll be letting him know about the business environment and |products than Mr Johnson thus earning more customers leading to| |what he will be expected to do. |a loss to Mr Johnson’s business. | |He is creating a new theme or service or product brand in a |Failure of the business | |fast food market |The business’ failure is a threat to Mr Johnson as he doesn’t | |Harnessing new technology |know how customers would react to his products, in that he | | |doesn’t know if they would like or dislike his products. | |Wrong location | | |Locating in a wrong place is a possible threat as he may locate| | |where there are not enough schools or colleges as his products | | |are targeting people that attend schools and colleges. | E. 3 A REALISTIC RATIONALE FOR THE DEVELOPMENT OF A COHERENT MARKETING MIX FOR THE PRODUCT OR SERVICE The marketing mix refers to the factors that can be adjusted or varied to increase customer appeal and ultimately, the sales of the product. The marketing mix provides a useful way of looking at the marketing of products.
Organisations need to create a successful marketing mix of: – the right product or service – sold in the right place – at the right time – using the most suitable form of promotion In order to implement a marketing strategy which meets customers’ needs, Mr Johnson will have to pay attention to the basic ingredients of the marketing mix otherwise known as the 4Ps. This involves matching the Product, to the consumer needs, determining the Price, deciding where and how the product or service should be Placed in the market and Promoting it through publicity, advertising and sales techniques. The marketing department develops an appropriate marketing strategy by identifying the most important components of the marketing operation, so as o determine the best marketing mix of the 4Ps for its target market. 1) PRICE [pic] Pricing is the only aspect of the marketing mix that directly produces revenue; the other aspects all involve costs. Therefore it is extremely important to get the pricing strategy right as this determines the financial success of a particular product and contributes to the long-term viability of the organisation. In developing a pricing strategy for Mr Johnson, I’m going to consider his strategic objectives, the price elasticity of demand of the product, the costs associated with the product, and competitors’ prices. I’m going to consider each of these in turn.
First, pricing objectives should reflect Mr Johnson’s overall objective which is to make a profit and survive. The total revenue can increase as a result of price reductions – when this happens the product is said to be price elastic this is represented in the diagram below: Price Revenue Cost P1 P2 Q1 Q2 At the original price P1, Q1 units are sold. With a price reduction per unit to P2, there has been a big increase in the quantity of units sold from Q1 to Q2. The loss in revenue through the price has been offset by the increase in revenue from greater sales. This has resulted in a net increase in total revenue.
When targeting a consumer market we would consider the price of the product very carefully if we price to high the consumers may be put of and stick to there regular brand, but if we price to low if will be seen as an inferior product to the one that they currently use. Second, through market research, he’ll need to establish the level of demand for the product at different prices. From this analysis it may be possible to derive a demand schedule and determine the degree of price elasticity. The more inelastic the demand for the product, the higher Mr Johnson can set his price. Third, Mr Johnson needs to identify the costs associated with the product, which in this case is a burger. Ultimately the price must in the long term, recover the costs of producing and selling the burger and be sufficient to generate a profit. Fourth, pricing should be competitive.
I advise Mr Johnson that it is important to analyse competitor’s prices and offers. He can do this directly, by sending out researchers to compare prices and offers in other fast food restaurants or by studying the price lists of his competitors. The external influences on price: · Competitor’s prices Competitor’s prices can be an external influence on Mr Johnson’s pricing because if the competitors lower their prices, he would have to lower his prices in order to retain his customers. In other words, when competitors do any changes to their prices, he will have to do the same changes or even better. · Supplier and distributor power/expected profit margins · Government Policy The Internal Influences on Price: The objectives of the business. The objectives of Mr Johnson can be an internal influence as when he starts trading; he may want to concentrate on making profit. He wouldn’t be able to make enough profit because his prices will be low in order to attract more and more customers. · Costs The costs of buying products such as bags of frozen chips form suppliers can also be an internal influence on price as these may be expensive which can then force him to increase the prices of his products. · R & D expenditure · Prices of other products in the range · Feedback from sales people Pricing Objectives Pricing objectives have to be liked to product quality.
However, there are other issues; each of the following has its own objectives: • Sales Maximisation: where large sales turnover is achieved, normally through reduction in price. • Profit Maximisation: Where the emphasis is on increasing profit margins • Survival: Where prices are pitched extremely competitively in order to help the business stay in business. • Return on investment: Where the price is set in order to achieve as swift a payback on investment as possible. The selection of a pricing objective is highly influential factor in determining the final price. Pricing Policy There are 3 key alternative policies: 1. Are we going to set the same prices as our competitors? (A market based pricing policy) 2.
Are we going to price below our competitors? (A low price policy with potentially narrow profit margins and dependant on high volume sales) 3. Are we going to price above our competitors? (A high price policy with potentially broad profit margins and based on a position of exclusivity and differentiation) * Cost plus pricing: This involves establishing the total costs of producing a particular product and adding a standard margin or mark up to produce the price of the product. Cost-plus pricing is the amount added to a unit for example an organisation produces 400 units of clothing cost of ? 12,000 the unit cost will be ? 30. A percentage of the price is added.
For example, fashion items are usually marked up by between 100 and 200%. Cost-plus pricing is popular there are many risks that are also involved if the price is set too high the sale will fall short of expectations. Cost-plus pricing shows a production-based approach to the market. Customers’ perceptions are not taken in to account. Cost-Plus pricing is easy to calculate and this method does not need to refer to price elasticity of demand, prices can be varied from the outcome of customers’ response to the product. * Target profit pricing: This uses break even analysis, which shows total costs and revenues at different volumes of sales. * Perceived value pricing: This relates to the non price variables in the arketing mix, which helps to raise consumers’ perception of a particular product and, in so doing, their willingness to pay a higher price. Customers’ expectations are different when it comes down to price and value. Some customers will want to pay a low price for a reasonably good quality product, other customers maybe willing to pay more for a better quality product. Price and value can eliminate customers from different segments if its not balanced. If a product is sold for a high price you will lose customers but a lower price may indicate that the pricing suggests low quality. Value includes getting more for the same price this will make customers buy. Competitor based pricing: This is a based pricing often used by smaller firms that lack sophisticated research techniques to determine their own prices. Competitive rivalry makes it difficult for customer to decide what product to buy, there maybe a little difference between them. It is down to the pricing and marketing in order for the product to sell well. Both competitors will pay close attention to each other’s product. For example digital camera may cost ? 49. 99 but a rivalry competitor which has a product very similar with all the features the other camera has however maybe a slightly lower in price e. g. ?44. 99 this will affect the organisation which sells its camera for ? 49. 99 and they may well change the price or offer a better deal. Market skimming: This exploits what are usually very short term conditions in the market place. Skimming is when a product is approached with little competition in the market and so is charged at a reasonably high price. Success of price-skimming strategy is made from the inelastic demand that enables the high pricing to do well for a short while. After the success of the high pricing, when there is enough profit the product is then lowered in price to attract new target segmentation, this strategy has advantages. The product will require effective development and research which may cost a lot, this will also be the outcome in promoting, advertising however price-skimming will return some of the set up cost.
Skimming leaves the option of dividing price into different segmentations that will allow the organisation to get maximum profit from its entire market segmentations. * Market penetration pricing: This is often used by firms trying to establish themselves in the market. Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share. This strategy is most often used by businesses that are willing to enter a new market on a small market share. Penetration pricing is only possible where demand for the product is set to be elastic, demand is price-sensitive this will attract new customers and make existing customers buy more due to the low price.
A successful penetration pricing strategy may lead to large sales in the market shares and therefore lower costs. Penetration strategies are often used by businesses that need to use up spare resources. The main disadvantage of implementing a penetration strategy is that competitors will supply a copy of the product and may sell for a lower price cancelling out any price reduction of the original product. A second potential disadvantage is that customers may note the image this may associate when customers buy regarding price with quality. The pricing strategy that I’m going to use as an advice to Mr Johnson about pricing his products is the “Perceived Value Pricing” strategy.
In this strategy there is a strong link between value and price. Delivery of value is an important ingredient of exchange. Marketing has been described as the ‘selling of goods that don’t come back to people who sell them’. If Mr Johnson doesn’t provide customers with a significant value proposition – what ever the price – goods may be returned or customers will not come back. In the longer term, the success of his business will depend on his ability to provide customers with value for money through the exchange process. 62% of the candidates that took part in my questionnaire are willing to spend between ? 1. 99 and ? 2. 50 on a portion of fish and chips, 32% are willing to spend between ? 2. 51 and ? 3. 0, 6% are willing to spend between ? 3. 51 and ? 4. 50 while none of them are willing to spend above ? 4. 50. This means that the 62% are value oriented and want to pay low prices for acceptable quality and the rest of the candidates want high quality and are willing to pay more for the portion of fish and chips. Based on the above information, I’ll advise Mr Johnson to price his products according to the nature of customers in the market place. If he charges high prices when most people are willing to pay the lowest price, then he would lose customers. As a consultant I’m advising Mr Johnson to price his products lower than his competitor’s products.
Take for example a pizza; he should price it lower than Pizza Hut’s. I went out and found out Pizza Hut’s prices for an Individual pizza and below are my findings Normal Pricing for Pizza Hut Pizza’s |Individual |Medium |Large | |? 5. 99 |? 8. 99. |? 10. 99 | Below are the prices that I suggest Mr Johnson should use on the same pizzas as those of Pizza Hut’s |Individual |Medium |Large | |? 4. 99 |? 7. 99 |? 9. 99 | Customers will be aware of the pricing of his pizzas and will want to buy it because it is at a low price and the value of the pizza will be better than the normal pizza hut pizzas.
If the pizza sales do well there will be a lot of profit made and then when he increases the prices, customers will still want to buy it. [pic] Customers do not like to pay a lot for a product if it is too high then the product will not see as much, if it is too low then customers may get the wrong impression and think that the quality of the trainers are not good or the price is suspiciously low. Therefore it is important that the price of Mr Johnson’s products fits into the psychologically right price category. In theory, businesses need to place their products at just the right place in the market cheaper than the market leader but better quality so consumers will try their products and continue to use it. (See product positioning map below) [pic] |Market Leaders. | | |X| | | |Ground Clear. | | | [pic][pic] 2) PRODUCT [pic] Mr Johnson needs to know what products and services he has to offer to his customers. In order to help him know what kind of fast food he will need to sell I carried out primary research by using a questionnaire. I designed the questionnaire to find out the needs of the customers. I analysed my results and I found out what kind of fast food is most likely to sell. Based on the results of my primary research I have come up with a list of the type of fast food which is most likely to sell:- • Kebab • Pizza • Fish & chips • Chinese • Burger • Chicken • Noodles
These are the products that are preferred by the vast majority of the candidates that took part in my questionnaire. When designing a product strategy, it is important to identify precisely what is being purchased in terms of customer benefits and how these help to satisfy a particular need. This means that it is essential to be clear about what the product provides. Understanding the type of product is important. Mr Johnson needs a different marketing strategy to sell his fast food products than a washing machine company. For his fast food the location, pricing and the packaging are the important features. For the washing machine, design and performance are more significant to the customers. Good marketing means developing products that ‘fit’ the market.
They need to be designed correctly and then developed to keep pace with market changes. I used market and product research to tailor fast food products to customer requirements. It helped me understand the customer and the main fast food products they like most. When developing a product the marketing department must identify the three levels of satisfaction which are core benefits (in terms of consumer’s wider perception of what the product provides), the actual product or service (as determined by its specification, brand name, packaging and level of quality) and additional range of benefits (including after sales service, advertising, customer advice, financing and delivery).
The marketing department will then design a strategy that allows customer satisfaction to be achieved at each level. Branding [pic] Branding helps to identify a product and differentiate it from those of competitors. It is used to establish consumer loyalty, in so doing, makes demand more inelastic. It also can convey a feeling of quality and reliability. As part of the marketing mix, brands are increasingly important because they can command added value, increasing market share and entry to distribution channels. I advise Mr Johnson to develop a brand for his products, for example he can name it “Super fast food”. This will enable consumers identify the brand as having desirable qualities and his products will gain extra value in the fast food market.
Since the brand will be exclusive to his business, it becomes an important source of competitive advantage. The power of a brand can be eroded or damaged through errors by the business. Brands need products that justify their reputation and support from advertising and other elements in the marketing mix. The ‘integrity’ of a brand needs defending against any threats. For example Mr Johnson must be extremely careful that his products are never publicly linked with cases of food poisoning. Packaging [pic] Packaging can combine with branding to differentiate the product. It also helps to attract attention, describe the product and, ultimately, make the sale.
A more affluent consumer is prepared to pay for the convenience, appearance, dependability and prestige that are communicated through better packaging. Not only does packaging serve a functional role of protecting the product, it also serves as a means of communication information and brand to the consumer and therefore has a promotional function. It allows intended quantities of the product to reach the consumer in perfect condition so the risks of theft, tampering and waste are all reduced. Nowadays, packaging is an extrinsic product attribute, which is seen to have as much influence on the buyer’s perceptions and behaviour as other attributes as price, brand names, and level of advertising.
The basic function of any pack is to protect its contents in transit, in storage, and in use. There are four basic packaging functions that Mr Johnson should know about; they are: 1. Distributor requirements 2. Consumer requirements 3. Legal requirements Below I am going to explain to Mr Johnson each of the functions. 1. Distributor requirements – Mr Johnson must take into account the length of the distribution channel, the amount of handling, which the container will receive, and variations in climate conditions, which may be encountered between the point of manufacture and sale. 2. Consumer requirements – consumers want products and have little direct interest in their packaging.
In many cases, however, the satisfaction to be derived from a product is dependent to both technical and aesthetic improvements in pack design. 3. Legal requirements – in addition to providing a distinctive and appealing means of identifying and protecting, the pack must also provide the user with information concerning its contents. The law may require some of the information. I have chosen packaging as one of Mr Johnson’s components, because packaging will be one of the main things in selling his products. Without it his products won’t sell well enough. Packaging is needed to show what is contained in the packaging and other information that concern the contents. It would also show the weight of the product, etc. PROMOTION
The purpose of promotion is to communicate directly to potential to existing customers, in order to encourage them to purchase the product or service and recommend it to others. I have discovered that teenagers are Mr Johnson’s target audience through market research and below are a summary of how I did it. The promotional strategy that I’m going to design for Mr Johnson will seek to increase customers’ awareness of his products, strengthen their preference for the products and their determination to purchase the products. The main promotional tools are advertising, sales promotions and public relations. Advertising Mr Johnson should know that advertising plays an important role of an organisation’s promotional activities.
It is one of the most effective promotional tools and is used to inform, persuade, publicise and remind potential and existing consumers about an organisation’s products and activities. The method of advertising that I would strongly recommend to Mr Johnson is by leafleting. It is the door to door distributing of leaflets. It helps in providing an effective way of targeting his audience. Mr Johnson should design flyers listing a menu of all the types of fast food that he is intending to sell and the services he is intending to offer. Then he can get one or two of his employees to distribute these through the post. By doing this, will help him establish a direct relationship with his customers.
The promotional literature in the flyer will cater for customers’ perceived needs. The ability of direct mail to target the teenagers will be cost effective for Mr Johnson as it will eliminate the supply of mail shots to those unlikely to buy. Another advertising method that I can advise Mr Johnson to use is the Newspaper, but not any kind of newspaper. [pic] Britain has a large coverage of national tabloid and broadsheet newspapers. The most popular is The sun, which is highly read by the 15-20 age group and this is Mr Johnson’s target audience. I’m not going to advise Mr Johnson to place an advertisement about his restaurant in The sun as it will cost him a lot of money.
But I’ll recommend him to advertise his restaurant in a local newspaper like The mercury because some of the teenagers read this newspaper as it advertises local job opportunities plus they get it for free through the post and if Mr Johnson places an advert in this newspaper, his target audience will come across it and therefore get to know about the restaurant. Advertising in The mercury would cost him money but not as much as it would if he places an advert in The sun. The advertising methods that I advise Mr Johnson not to use are through T. V or radio as these are going to be very expensive even though they have the largest audience. Some of the products that he’ll be selling will still be advertised on T. V, products like the soft drinks. Public relations
According to Haywood (1995) public relations barely existed as a management function, outside some Western governments and their military forces, before the 1950s. Today it is a widely established professional practice with its own professional bodies and qualifications. Public relations are involved in much more than publicity. Publicity is vital in projecting an organisation’s personality but is simply the visible expression of corporate policy and strategic intent. Professional public relations have an important role and contribution to make to the formulation and implementation of both policy and strategy, which goes far beyond the marketing communications process.
PR must work closely with other marketing communications such as advertising, selling, and sales promotion, and be integrated with them to achieve an efficient and effective communication strategy. PR is one of the components that I have chosen. This is because without it your company won’t get enough publicity and then no one would want to buy it. The purpose of public relations is to provide an external environment for an organisation in which it is popular and can prosper. There are different types of public relations activities such as charitable donations and community relations, hospitality, press releases, visits and open days, sponsorship and minor video changes. Sales promotion
A sales promotion is an attempt to communicate directly with potential consumers or distributors in order to encourage them to purchase or stock the product or service as well as to recommend it to others. Due to their nature they are normally short term, to give boost to sales or help launch a new product or break into a new market. Most consumers are on the look out for a ‘bargain’. The attractiveness of a sales promotion gives the consumer the feeling they are achieving. They are a variety of sales promotions that Mr Johnson can use. Competitors – the entry to many competitors is through the purchase of the product; for example Mr Johnson can print an entry form for a competition on the back of a pack of fish & chips. Free offers – the feeling a consumer gets when they know they are getting something for nothing is normally irresistibly.
Mr Johnson can use the ‘Buy one get one free’ promotion method in order to attract consumers. [pic] Coupons or refunds – Mr Johnson can offer consumers’ coupons that will give them money off a repeat purchase, almost tying the consumer into buying the product again. [pic] PLACE The marketing department has to ‘deliver’ the product to the customer and as when it is required. The extent to which this is achieved depends upon decisions regarding the location of the production or service organisation, the availability of the product or service and the method by which it is distributed. Location Decisions on location should take account of the convenience of access for customers.
From my market research, 64% of the participants preferred a residential location to a high street location, this could be because 86% of the participants are willing to travel 3-5 minutes to get their food but the fast food are a bit far away as 44% of the people said do. And so therefore they prefer a location near by. Based on this information, I’ll advise Mr Johnson to find a residential estate location which should have pubs, clubs and may be a cinema in order to create an area of entertainment. Product availability Mr Johnson will need to make decisions regarding place which ensure the availability of his products and services when customers need them and in the quantity they require. This means that the organisation of production, storage and distribution must contribute towards the realisation of the consumers’ expectations.
For example consumers who will be buying a particular type of pizza will need to be confident that, if they visit Mr Johnson’s restaurant, the pizza they want is available immediately. Distribution system Sellers need to engage effectively with their potential buyers – often through a wide range of channels. The distribution channel is the way a product passes through various organisations between production and consumption. Many distribution channels are possible. The most common are shown below; TRADITIONAL RETAILER ONLY DIRECT [pic] As always, the best choice for a producer depends on the balance between cist and benefit. The ‘middle man’ in distribution carries some important tasks: • Packaging • Transport of goods • Promotion or merchandising Financing the distribution for the market • Stockholding at each stage • Collecting market intelligence Taken together these activities add value to the product which is reflected in the price mark – ups made by the wholesaler and retailer. The distribution strategy that I would advise Mr Johnson to use is the ‘retailer only’ distribution channel. Eliminating the wholesaler and selling direct to the retailer can be a good strategy when a higher degree of control over the final stage sale is required and the number of retailers is limited. E. 4 AN UNDERSTANDING OF A MARKETING STARTEGY FOR A PRODUCT OR SERVICE WITH A CLEAR UNDERSTANDING OF THE PRINCIPLES OF MARKETING
A marketing strategy is a plan of the medium – to long term actions required to achieve the company goals or targets. Marketing strategy is the marketing contribution. Successful marketing strategy requires careful planning. This requires an understanding of the nature, possibilities and potential of the business and the environment in which it is operating. The aim of having a marketing strategy is to shape the company’s activities and products to generate the best returns for the business. TYPES OF MARKETING STRATEGY There are many possible strategies for any business. The strategy may be specific to a particular product. It may focus on the whole product range, or be focused on new products or new markets.
Among the main marketing strategies are the following: Marketing penetration: this is about increasing market share. It concentrates on existing markets and products. The business should have good knowledge of these. The strategy will involve finding ways of increasing sales. This may be by: • Finding new customers – perhaps by widening the product’s appeal to attract additional buyers. • Taking customers form competitors – this may be achieved by aggressive pricing or by offering additional incentives to the customer. • Persuading existing customers to increase usage – many food companies give recipes wit their products to suggest additional ways of using the product. Market development: this is about finding new markets for existing products.
It is a more risky strategy as it involves dealing with new customers and markets. It may be done by: • Repositioning the product – this will target a different market segment. This could be by broadening the product’s appeal to a new customer base. • Moving into new markets – some British retailers have to opened up outlets abroad while others have entered into joint ventures or have taken over a similar operation in another country. [pic][pic][pic] ———————– Under 15 15 – 20 0% (teenagers) 90% 21 – 32 Above 33 10% 0% Producer Wholesaler Retailer Consumer Producer Retailer Consumer Producer Consumer
