Unit 2.1 How do businesses start?

Today’s Lesson The Entrepreneur Famous Entrepreneurs Reasons for Starting up a Business Innovations & Inventors Tycoons

The Entrepreneur

Famous Entrepreneurs

Reasons for Starting up a Business

Innovations & Inventors

Tycoons

The Entrepreneur What is an entrepreneur? An individual who brings together the factors of production

What is an entrepreneur?

An individual who brings together the factors of production

Who is he? This is Bill Gates, the world’s richest man What is he famous for? He owns Microsoft, who created Windows for PCs

This is Bill Gates, the world’s richest man

What is he famous for?

He owns Microsoft, who created Windows for PCs

Who is he? This is Richard Branson, Britain’s most famous entrepreneur He founded Virgin Records and has since moved into airlines, rail, cinema, phones, insurance…

This is Richard Branson, Britain’s most famous entrepreneur

He founded Virgin Records and has since moved into airlines, rail, cinema, phones, insurance…

Anita Roddick Founder and former owner of The Body Shop

Founder and former owner of The Body Shop

Sir Tom Farmer One of Scotland’s richest men Owns Kwik Fit, and Chairman of Hibernian FC

One of Scotland’s richest men

Owns Kwik Fit, and Chairman of Hibernian FC

Roman Abramovich He is the second richest man in Russia A billionaire who made his money in oil and aluminium Now owns Chelsea FC

He is the second richest man in Russia

A billionaire who made his money in oil and aluminium

Now owns Chelsea FC

Reasons for starting up a business To make money To provide a public service Because they see a demand Because they have an idea Because they can do better

To make money

To provide a public service

Because they see a demand

Because they have an idea

Because they can do better

Innovators and Inventions

Tycoon John Paul Getty (1892-1976) was an oil baron . He was at one time the richest man in the world. He was successful in business yet assembled a huge art collection which became a museum in 1974.

John Paul Getty (1892-1976) was an oil baron .

He was at one time the richest man in the world.

He was successful in business yet assembled a huge art collection which became a museum in 1974.

Today’s Lesson The Marketplace Buyers Sellers Customers & Consumers

The Marketplace

Buyers

Sellers

Customers & Consumers

The Marketplace The Marketplace brings together both buyers and sellers A stall Corner shop Auction Mail order Internet

The Marketplace brings together both buyers and sellers

A stall

Corner shop

Auction

Mail order

Internet

Buyers Buyers use money to get goods and services Buyers can also be from the industrial market

Buyers use money to get goods and services

Buyers can also be from the industrial market

Sellers Sellers offer goods and services for money

Sellers offer goods and services for money

Customers and Consumers What is the difference between customers and consumers? Customers buy the product; consumers use the product Consumers are called end-users of the product

What is the difference between customers and consumers?

Customers buy the product; consumers use the product

Consumers are called end-users of the product

Today’s Lesson What is marketing? Product v Market Orientation Introduction to the Marketing Mix

What is marketing?

Product v Market Orientation

Introduction to the Marketing Mix

Marketing Marketing is not just about selling. Marketing is knowing about and satisfying customer needs For businesses to be successful and market their goods/services they have to consider:

Marketing is not just about selling.

Marketing is knowing about and satisfying customer needs

For businesses to be successful and market their goods/services they have to consider:

Product v Market Orientation Firms which are product orientated focus on making the product/service better, in terms of quality & technical excellence Firms which are market orientated focus on what the customer actually wants

Firms which are product orientated focus on making the product/service better, in terms of quality & technical excellence

Firms which are market orientated focus on what the customer actually wants

The Marketing Mix The 4 Ps: Product Price Place Promotion

The 4 Ps:

Product

Price

Place

Promotion

Product This is the good/service produced Does it satisfy consumers’ needs? Is it good quality? Can demand be met?

This is the good/service produced

Does it satisfy consumers’ needs?

Is it good quality?

Can demand be met?

Price The monetary value offered to consumers Does the price help cover production & labour costs? Is price affordable to consumers?

The monetary value offered to consumers

Does the price help cover production & labour costs?

Is price affordable to consumers?

Place This is where the product/service is available to consumers Shops? Direct mail? Online?

This is where the product/service is available to consumers

Shops?

Direct mail?

Online?

Promotion This involves letting people know about your product/service Word of mouth Advertising Sales Promotions Public Relations

This involves letting people know about your product/service

Word of mouth

Advertising

Sales Promotions

Public Relations

Summary The marketing mix is: Selling the right product At the right price At the right place With the right promotional tool

The marketing mix is:

Selling the right product

At the right price

At the right place

With the right promotional tool

Today’s Lesson Identify Needs Market Research Desk Research Field Research

Identify Needs

Market Research

Desk Research

Field Research

Identify Needs Before we satisfy consumer needs we need to find out what they are! What do people want? Research the market: Ask consumers!

Before we satisfy consumer needs we need to find out what they are!

What do people want?

Research the market: Ask consumers!

Market Research The two main methods are: Field Research Desk Research

The two main methods are:

Field Research

Desk Research

Desk Research Also called Secondary Information Using info already at hand (Internal info) Using info already published by others (External info)

Also called Secondary Information

Using info already at hand (Internal info)

Using info already published by others (External info)

Desk Research Data Internal Data Sales figures Customer records Customer complaints External Data Government publications Media CD Roms, Internet Trade Associations

Internal Data

Sales figures

Customer records

Customer complaints

External Data

Government publications

Media

CD Roms, Internet

Trade Associations

Field Research Also called Primary Research Gathering new info by themselves Can use questionnaires, surveys or interviews to find out about what consumers want

Also called Primary Research

Gathering new info by themselves

Can use questionnaires, surveys or interviews to find out about what consumers want

Today’s Lesson Surveys & Questionnaires +/- of Post +/- of Phone +/- of Face-to-face interviews

Surveys & Questionnaires

+/- of Post

+/- of Phone

+/- of Face-to-face interviews

Methods of Conducting Surveys/Questionnaires By Post By Telephone Face-to-Face

By Post

By Telephone

Face-to-Face

Research by Post Advantages Cheap People can think about answers people may respond rather than personal interview anonymous Disadvantages Low response rate How valid are answers? Limited amount of information

Advantages

Cheap

People can think about answers

people may respond rather than personal interview

anonymous

Disadvantages

Low response rate

How valid are answers?

Limited amount of information

Research by Phone Advantages More flexible than by post Response rate higher Quick and easy Disadvantages Person hasn’t time to think Limited info collected expensive

Advantages

More flexible than by post

Response rate higher

Quick and easy

Disadvantages

Person hasn’t time to think

Limited info collected

expensive

Face-to-Face Research Advantages Flexible & allows more control Detailed info collected Can use visual aids Disadvantages Expensive & time consuming People don’t like being stopped in street

Advantages

Flexible & allows more control

Detailed info collected

Can use visual aids

Disadvantages

Expensive & time consuming

People don’t like being stopped in street

Today’s Lesson How products are developed Stages in New Product Development Prototypes

How products are developed

Stages in New Product Development

Prototypes

Product Development

Stages in NPD

Prototypes Before a new product is released, a prototype is made. Prototypes are working models used to get potential customers opinions on them. There are only a few of them as it is costly to go into full production on a gamble. This is NASA’s Venture Star, the Space Shuttle’s replacement

Before a new product is released, a prototype is made.

Prototypes are working models used to get potential customers opinions on them. There are only a few of them as it is costly to go into full production on a gamble.

Today’s Lesson Market Segmentation Consumer Behaviour

Market Segmentation

Consumer Behaviour

Market Segmentation

Consumer Behaviour

Marketing Mix

Product Life Cycle

Branding

Pricing

Place

Promotion

Business Support Support is offered in the shape of money or advice The Prince’s Trust Local enterprise companies Local government Business start-up schemes banks

Support is offered in the shape of money or advice

The Prince’s Trust

Local enterprise companies

Local government

Business start-up schemes

banks

Business Plan “ If we fail to plan, we plan to fail!” If a business is to meet its goals and objectives it needs a business plan When do we use it? When starting out for the first time Showing potential investors When planning for expansion

“ If we fail to plan, we plan to fail!”

If a business is to meet its goals and objectives it needs a business plan

When do we use it?

When starting out for the first time

Showing potential investors

When planning for expansion

Business Plan Format The Background The Personnel Business Activity The Market Trading Summary The Proposal

The Background

The Personnel

Business Activity

The Market

Trading Summary

The Proposal

Detailed Business Plan Business Name Company Objectives Location/premises Management/staff Description of product/service Equipment Marketing Plans Financial position/plans Production details Future aims

Business Name

Company Objectives

Location/premises

Management/staff

Description of product/service

Equipment

Marketing Plans

Financial position/plans

Production details

Future aims