Fundamental Business Management and Marketing Principles

Marketing and Product Design

Design involves finding the right balance between creating something that people desire to have, that they can afford, and that works.

The Design Mix

• Aesthetics: The look, feel, and smell of the product.
• Function: Does it work?
• Economic: Is it simple enough for it to be made quickly and cost-effectively?

Branding, Promotion, and Distribution

Branding is the process of creating a name for the customers. Promotion is used to persuade people to buy the products. Pricing strategies represent the plan for setting a product's price, while distribution focuses on how to get the product to the right place for customers to buy.

Product Portfolio and Marketing Strategy

The product life and portfolio theory suggests that all products follow a similar pattern over time. A marketing strategy is a plan of action designed to promote and sell a service.

The Boston Matrix

• Cash Cow: High market share in a low-growth market.
• Dog: Low market share in a low-growth market.
• Star: High market share in a fast-growing market.
• Problem Child: Small market share in a fast-growing market.

Market Segmentation and Positioning

A niche market focuses on a specific segment of the market, whereas a mass market focuses on the majority of consumers. A market strategy defines what you want to achieve and how. Segmentation involves finding ways to divide a market to identify available opportunities, and positioning is about making an image in the customer's head.

Economic Principles and Market Research

Demand is the amount of people willing to pay at any given price, while supply is the amount of goods producers are willing to sell. Equilibrium is the point where there is a balance between supply and demand. Profit maximization is the ability of the company to achieve maximum profit.

Market Orientation and Share

Market orientation involves finding what the consumers want or need. Market share is the percentage of total sales volumes in a market.

Elasticity of Demand

Price Elasticity of Demand (PED) measures the extent to which demand for a product changes when its price is changed. The formula is: PED = % Change in Quantity Demanded / % Change in Price. A result between 0 and -1 is inelastic, while a result less than -1 is elastic.

Income Elasticity of Demand (YED) measures the extent to which demand for a product changes when there is a change in consumers' real income. The formula is: YED = % Change in Quantity / % Change in Income.

Market Research Methods

Market research is used to gather information about consumers. This includes secondary research (internet, trade press) and primary research (going directly to the person).

Human Resources and Organizational Design

Staffing involves the thinking behind the broad approach to staff. Recruitment is the process of filling job vacancies by defining the job, and training is work-related education where employees learn new skills.

Organizational design involves creating the formal hierarchy that establishes who is answerable to whom throughout the organization. Leadership is about inspiring staff to achieve goals.

Motivation in the Workplace

Motivation occurs when people want to do something because they want to. Motivation in practice includes financial incentives, team and flexible working, and rewards.

Business Ownership and Liability

• Sole Traders: An individual operator who benefits financially but has unlimited liability.
• Partnership: Two or more people with unlimited liability.
• Unlimited Liability: Owners are liable for any debts.
• Limited Liability: Owners only lose what they have invested.

Opportunity cost is the benefit, profit, or value of something that must be given up to acquire or achieve something else.