Bs unit 3 section 1 of 6

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EDEXCEL
AS Business Studies
REVISION

by Apsara Sumanasiri
© 2013 by Apsara Sumanasiri. All rights reserved. | Edexcel AS Business Studies Unit 2 Revision on Scholar Virtual Academy

AS Business Studies
Unit 2

Section 1
Marketing Plan


Marketing objectives
& Strategy


What is marketing?

Marketing is the management process
that is responsible for
identifying, anticipating and satisfying
customer requirements profitably


What is marketing?

Customer is KING!

If firms want to survive, they must satisfy
consumer wants.


The role of marketing

The main purpose of marketing is to
increase customer demand, i.e. to shift
the demand curve outwards.


The role of marketing

The marketing department does not
work in isolation.

The objectives of the marketing
department must fit in with the
objectives of the business.


Marketing objectives

Possible marketing objectives could be:
• To increase sales
• To create brand loyalty
• To develop the product range
• To survive in the market
• To change the market position
• To increase Market Share


What determines marketing
objectives
External factors: Internal factors:
• Customer behaviour • Market Research
• Competitor Findings
behaviour • Forecasted Sales
• The economy • Forecasted Profits
• Technology • Availability of
• Government Finance
• Changes in the law
• Suppliers


Forming a marketing strategy

A marketing strategy is designed to
achieve the marketing objectives.

The marketing strategy should consider:
• The target market
• The marketing mix
• The strategy of the business


Mass Vs. Niche Marketing

A niche market:
A mass market:

• Targets a very small
• Appeals to the
segment of a
whole market
market
• Requires high sales
• Sales will be
volume and low
lower, but prices will
prices
be higher


The marketing mix

The marketing mix
in said to consist of
the 4 key elements
needed for
successful
marketing, often
referred to as the
4 Ps.


Marketing Mix
* Product *


The marketing Mix - Product

Developing new products is time
consuming and businesses will want to
protect their new products and ideas
(intellectual property). This can be done
through:
• Patents
• Copyrights
• Trademarks

Product Life Cycle


Managing a product portfolio
A product portfolio refers to a range of products produced by a
company or brand.

A portfolio can be managed using a product life cycle approach


How useful is the product life
cycle?
The product lifecycle is important to find
the approach on the other factors of the
marketing mix, however:
• It’s impossible to tell how long a product
is going to last and therefore identify
where on the PLC the product is.
• It’s of little use to tertiary sector businesses
• Less effective for firms with a large
product portfolio (eg. NOKIA)
• It only considers sales and profits


Boston Consultancy Group
Matrix


Matrix
A portfolio of products or simply put, a
group of products can be analysed using
the Boston Matrix. This matrix categorises
the range of products that the business has
into one of four different
types, Stars, Problem child or question
mark, Cash cow and question mark.

This classification is done based on two
criteria ie. Market share and market
growth.

Matrix
• Market share – refers to the proportion
of the total industry sales that a
particular product hold and thus looks
at whther the product being sold has a
low or high market share?
• Market growth – looks at whether the
numbers of potential customers in the
market growing or not?


Matrix
Stars are high growth products
competing in markets where they are
strong compared with the competition.
Often Stars need heavy investment in
order to sustain the market share during
growth. Eventually growth will slow
and, assuming they keep their market
share, Stars will become Cash Cows


Matrix
Question marks are products with low
market share operating in high growth
markets. These are typically new products
in the market. Therefore, would have low
mkt share togetherwith a high potential for
growth.. This suggests that they may need
substantial investment to grow market
share at the expense of larger competitors.
Management have to think hard about
“Question Marks” - which ones should they
invest in to help grow? Which ones should
they allow to fail or shrink?

Matrix
Cash cows are low-growth products with a
high market share. These are
mature, successful products, thus have a
high mkt sh together with less growth
potential due to the products maturity in
the mkt and thus low potential to grow any
futher.. these products need to be
managed for continued profit - so that they
continue to generate the strong cash flows
that the company needs. Thus, re-
investment is very important.


Matrix

Unsurprisingly, the term “dogs” refers to
products that have a low market share
in unattractive, low-growth markets.
Dogs may generate enough cash to
break-even, but they are rarely, if ever,
worth investing in. Dogs are usually sold
or closed.


Marketing Mix
* Price *


Influences on price

• Demand and supply
• Market conditions
• Production costs
• Market structure
• Taxes and subsidies
• Business Objectives
• Marketing mix


Pricing strategies

Short-term pricing strategies
These are often used for promotional
reasons

• Penetration pricing
• Market skimming
• Discounts/Sales
• Loss leader

Pricing strategies

Long-term pricing strategies

• Demand-based
• Cost-based
• Competitor-based
• Psychological


Price Elasticity of Demand

PED shows the responsiveness of
quantity demanded to a change in
price. It can be calculated as:


Price Elasticity of Demand
PED is always negative, due to the inverse
relationship between price and quantity
demanded. Once the negative sign is
ignored there are three possible outcomes:


PED and total revenue

Price increase Price decrease

Demand elastic Revenue falls Revenue rises

Revenue remains Revenue remains
Unit elastic constant constant

Demand inelastic Revenue rises Revenue falls


Marketing Mix
* Place *


Good Luck
Hope you’re doing some effective revision…

Happy Revising!

Apsara 


For more details and revision material
contact:

Scholar Virtual Academy
Address : No 03, Daisy Villa Avenue, Bambalapitiya, Colombo 04
Tel : (94 11) 2553466 / 2593571
Email : applicationises@scholar.lk
Website : www.international-scholar.com


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