Business Operations: Costs, Productivity, and Marketing

In the short term, some companies can convert fixed or variable costs to fixed costs. Generally, fixed costs, such as rent for premises, are independent of the level of production. Variable costs are proportional to the volume produced.

Types of Costs

• Direct Costs: These can be directly related to the production of a product or a specific department.
• Indirect Costs: These relate to multiple departments or products, making direct allocation difficult.

Productivity

Productivity is the relationship between the quantity of output produced and the quantity of resources used to achieve that production.

Gantt Chart

A Gantt chart is a visual tool where the horizontal axis represents the time needed to complete a task, and the vertical axis lists the activities to be performed. It allows for effective project management and control.

Control/Purchase Agreements

Companies may enter into agreements with other companies to ensure the supply of components or to partner with prestigious brands, maintaining their independence.

Functions of the Department of Commerce

The Department of Commerce is responsible for all commercial functions necessary to deliver goods or services to the consumer. These functions include:

1. Planning: Defining future actions and strategies.
2. Market Research: Gathering and analyzing market information.
3. Promotion and Advertising: Promoting the product to the target audience.
4. Sales: Organizing and managing sales relationships.

Market Dynamics

A market is formed by individuals or entities that create supply and demand for a product or service. It encompasses all actions related to buying and selling.

Types of Markets

• Current Market: Consists of today's consumers.
• Potential Market: Includes current consumers and those who could become consumers with adequate marketing.
• Market Trends: Refers to the expected future direction of the market (tendency).
• Consumer Market: Individuals purchasing goods or services for personal consumption.
• Industrial Market: Businesses purchasing products to use in the production of other goods or services.

Market Quota

Market quota refers to the portion of a market that a specific company controls. Understanding market quota is crucial for strategic planning.

Market Segmentation

Market segmentation involves dividing the market into smaller, more homogeneous groups to tailor marketing strategies. Common segmentation criteria include:

• Demographic: Age, sex, race, marital status, height, weight.

Market Research

Effective market research requires:

1. Clearly defined objectives.
2. A well-designed study model.
3. Data collection methods (e.g., surveys, existing data).
4. Data classification, analysis, interpretation, and presentation of results.

Marketing

Marketing is the set of actions a company takes to satisfy consumer needs and desires while achieving profitability. The four key elements of marketing are:

• Product
• Price
• Promotion
• Distribution

Brands

Brands use names, symbols, and designs to differentiate themselves from competitors. A brand typically includes a name and a logo. Effective brand names are short and simple.

Product Life Cycle Stages

1. Introduction Stage: The product is launched into the market.
2. Growth Stage: Sales experience a significant increase.
3. Maturity Stage: Sales stabilize and maintain a steady level.
4. Decline Stage: Sales begin to decrease.

Wholesalers and Retailers

Intermediaries are individuals or organizations involved in the distribution of products outside of transportation.

• Wholesalers purchase products from manufacturers and sell them in large quantities to retailers or other wholesalers.
• Retailers sell products in small quantities directly to the final consumer.

Advertising

Advertising involves a company using paid media (TV, radio, etc.) to send a message intended to influence consumer behavior. It provides information about product characteristics and aims to persuade consumers to purchase.

Principles of Advertising

• Capture attention.
• Stimulate consumer interest.
• Create a desire for the product.
• Drive sales.