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FUNCTIONAL DEPARTMENTS
Research and Development Purchasing Production Marketing Direct service provision Accounting and Finance Human Resources Administration

Organizational culture and committees

Purchasing
Purchasing mix: Quantity, Quality, Price and Delivery Purchasing is 'the acquisition of material resources and business services for use by the organisation'. Cost: Raw materials and subcomponents purchases are a major cost for many firms. Quality: The quality of input resources affects the quality of outputs and the efficiency of the production function.

Stock control Chart

Responsibilities of a purchasing manager

Inputs for production Inputs for administration Cost control Liaison with the R&D Supplier management Maintenance of inventory levels. Obtaining information on availability, quality, prices, distribution and suppliers for the evaluation of purchasing alternatives.

Production
Converting inputs to outputs The production function plans, organizes, directs and controls the necessary activities to provide products and services, creating outputs which have added value over the value of inputs. Making sure that raw materials are provided and made into finished goods effectively. Production and planning (purchase and storing) Stock Control, The design and technical support and Quality control

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Service operations
Services are intangible, cannot be stored, are inherently variable in quality and nature and their purchase results in no transfer of property. The people and processes involved in providing them are therefore of paramount importance. Intangibility, Inseparability (Many services are created at the same time as they are consumed), Variability

Implications of service provision

Poor service quality at one occasion may lead to prolonged disrepute Pricing of services is often complicated, especially if large numbers of people are involved in providing the service. Human resources management is a key ingredient in the services marketing mix

Accounting and Finance

Bookkeeping procedures Preparing final accounts Providing management information Raising finance Managing finance Helping with audits

Research and Development (R&D)

Improving existing products and Inventing new products (product research) Bringing ideas to sales and production to improve the ways of production (Process research) Must work closely with marketing and production department

Human resources
Human resource management (HRM) is the process of evaluating an organization's human resource needs, finding people to fill those needs, and getting the best work from each employee by providing the right incentives and job environment with the overall aim of helping achieve organizational goals.

Objectives of HRM
To develop an effective human component for the organisation which will respond effectively to change. To obtain and develop the human resources required by the organisation and to use and motivate them effectively. To create and maintain a co-operative climate of relationships within the organisation. To meet the organisation's social and legal responsibilities relating to the human resource.

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Importance
To increase productivity To enhance group learning To reduce staff turnover To encourage initiative

Human Resource
Recruitment and selection, job description Human resource audit Training Performance management Dismissal and redundancy Remuneration Negotiating with trade unions Making sure safety needs are met Paper work for all the employees records

Marketing
These are the main section of the market departments: Sales department is responsible for the sales and distribution of the products to the different regions. Promotion department decides on the type of promotion method for the products, arranges advertisements and the advertising media used. Distribution department transports the products to the market.

Public relations : corporate activities like community events and sponsorships. Conducting market research To understand the various needs of the customers.

ACCOUNTING AND OTHER DEPARTMENTS

MarketingWhats It All About?

More than Selling and Advertising

Provides consumers with need-satisfying goods & services

CUSTOMER SATISFACTION!!!
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What Is Marketing?

Marketing

Personal Selling? Advertising? Making products available in stores? Maintaining inventories?

All of the above, plus much more!

Objectives of Marketing

To increase sales revenue To improve and maintain image of the product or the business To increase market share To target a new market To target a new market segment The marketing process should be continuous and dynamic as peoples taste and preference changes over time. E.g. Audio cassettes and typewriters are replaced by better products for same use

Basic functions
Include:
Customer analysis Buying Selling Product and/or service planning Social responsibility Price planning Distribution Market research Opportunity analysis

Marketing mix
The set of controllable variables that the firm can use to influence the buyers responses Concerned with how to influence consumer demand A model used when considering the range of activities necessary to construct and implement a comprehensive marketing strategy

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Jerome McCarthys 4Ps

Price

Product Strategies
The starting point of the 4 Ps Product Includes physical unit, package, warranty, service, brand, image, and value

Promotion Place Product

What Is a Product?
Product is the heart of Marketing Mix

Products
Technical features, benefits and limitations of the product or products offered by the business The technical features of the product are important because they will determine whether it will meet the needs of the customer

Product

Price

Promotion

Place (Distribution)

Core Vs. Augmented

Distribution (Place) Strategies

Product availability where and when customers want them. Place Involves all related to moving the product from the producer to the consumer

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The processes of getting goods or services from producers to consumers The products must be available in the right quantity, in the right location at the right time and at an acceptable price If it is not readily available to customers, they will turn to a rival product. A marketing channel is a system of relationships existing among businesses that participate in the process of buying and selling the product or service. Channel intermediaries are those organizations which facilitate the distribution of goods to ultimate customer.

Channels for Consumer Products

Direct Channel Producer Retailer Channel Producer Wholesaler Channel Producer Agent/Broker Channel Producer Agents or Brokers Wholesalers Retailers Consumers Consumers Retailers Consumers Wholesalers Retailers Consumers

Promotion Strategies
Role is to bring about exchanges with target markets Promotion Includes integration of personal selling, advertising, sales promotion, and public relations

PROMOTION
Any form of communication a business or company uses to inform, persuade, or remind people about products and to improve its image

Promotion
Promotion may be highly specific to individual products or a range of products, or may enhance brand recognition in respect of the organization's public image In some cases the name of the product may become synonymous with the organisation itself E.g, Xerox, Kellogs, Hoover etc.

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ADVERTISING
The non-personal Communication of Ideas, goods or services delivered through selected media channels.

Objectives of advertising
Increasing the usage of a certain product and hence acquiring more orders. Creating new customers and increasing brand recognition. To obtain feedback from customers regarding a certain product. To indicate introduction of new products or replacement of old ones.

**PAID FOR**

Major Types of Advertising Media

Newspapers Magazines Radio Television Outdoor Media Internet Alternative Media

Sales Promotion
A range of tactical marketing techniques (other than personal selling, advertising, and PR) designed within a strategic marketing framework, to add value to product or service in order to achieve a specific sales and marketing objective

SALES PROMOTION
2 for 1 Sale Buy One, Get One Free $2 off after 8PM on Tuesday

Public Relations
Any activity designed to create a favorable image toward a business, its products or its policies.

stimulate purchases increase store traffic

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Publicity
A specific kind of public relations that involves placing positive and newsworthy information about a business, its products, or its policies in the media is called..

Publicity
Advantage It is free! Disadvantage.. Its contents cannot be controlled by the business

What is the largest form of promotion?

Personal Selling!
This type of promotion requires contact with potential buyers

Personal Selling
A promotional method in which one party (e.g., salesperson) uses skills and techniques for building personal relationships with another party (e.g., those involved in a purchase decision) that results in both parties obtaining value

Pricing Strategies
The most flexible of the 4 Ps Price Price X Units Sold = Total Revenue

Price
This refers not only to the price of the product, but to all costs related to the purchase The price may be a one-off payment, or a series of payments over time In the context of professional services, price is expressed as fees or charges

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3 Key Questions before pricing

How much does it cost us to make the product? How much are competitors charging for a similar product? What price are customers prepared to pay? Government intervention must be studied

Cost-Based pricing
The cost of producing a product sets a minimum price If cost exceeds the price, then a commercial business cannot continue in business indefinitely It could be little complicated than it sounds as calculation of full costs are difficult Marginal cost pricing

Competition-Based Pricing
Setting a price by examining what competitors are charging How to define a competitor? Competition pricing is common when knowledge of the going rate for that particular product is high among consumers.

Demand-Based Pricing
What customers are prepared to pay It depends on effective segmentation of markets and price discrimination which achieves maximum price from each segment Price skimming, penetration pricing, psychological pricing etc. Can discriminate customers on the basis of:
Demographic and social characteristics The time of the purchase The place of purchase

The extended marketing mix

People
People are the most unpredictable resource employed by an organisation Contribution of any individual can vary from day to day, or even during any single day Moment of truth

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People
An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for.

Process
Refers to the systems used to assist the organization in delivering the service. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.

Systems used by airlines for booking, ticketing and moving customers through airports and on to airplanes, and the systems used by financial institutions to provide remote banking services

Physical evidence
Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organization. Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organizations perceptual plan of the service.

the design of the building in which the service is delivered, and sometimes the environment in which the building is situated interior layout, decor, as well as use of contemporary floor plans uniforms design of web pages and forms business cards loyalty cards.

Marketing strategy
Must be in consistent with strategic plan Goals and objectives, e.g.:
What business are we in? What broad markets to serve? What market segments? Competition within markets? Customer needs, expectations and power? Strengths and weaknesses? Production Product Sales Marketing

Orientation

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Marketing audit

Analysis
Where are we now?

Analysis
Where are we now? How does the companys market share compare to rivals? What are our weakness and strengths? What is the opportunities and threats we face in our marketing environment?

Planning
Where do we want to be?

Implementation
How will we get there?

Control
Did we manage to get there?

Planning
Where do we want to be? What's our mission, objectives for next year? What should be our strategy?

Control
Did we achieve our objectives? If not, why? How can it could be corrected? Start again and conduct further analysis

Implementation
How are we going to put into effect the strategy which leads us to our objectives?

Mass Market
The group of consumers who are the majority buyers for common household products, i.e. they could be tagged as being average. This group consists of such a wide variety of people, their desires towards a certain product may be totally different from each other. Often competition to supply the mass market is fierce, but relatively easy to enter because of the large amount of consumer pool available. There is little scope for differentiation in a mass market, e.g. petrol, baked beans etc.

Niche Market
A niche market is a relatively small and identifiable segment of a larger market. They are often overlooked by large firms. They are attractive to small businesses as they face less competition and can charge premium prices. For example, made-to-measure clothing is a niche market and tailors can charge a higher price for their clothes than mass-produced items.

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Segmenting and Targeting Markets

Market Segmentation
Market
People or organizations with needs or wants and the ability and willingness to buy A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The identification of sub-set of

Market Segment

Market buyers within a market who share Segmentation similar needs and who have similar
buying process.

The Importance of Market Segmentation

Markets have a variety of product needs and preferences Marketers can better define customer needs Decision makers can define objectives and allocate resources more accurately

Segmentation Bases
Characteristics of individuals, groups, or organizations used to divide a total market into segments. (variables)

Bases for Segmentation

Age

Product Life Cycle

Product Life Cycle

Gender

Geography

A concept that provides a way to trace the stages of a products acceptance, from its introduction (birth) to its decline (death).

Socio-economic groups

Psychological factors

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Marketing Strategies for PLC

INTRODUCTION GROWTH
More models Frequent changes. Expanded dealers. Longterm relations Aggressive ads. Stimulate demand Fall as result of competition & efficient production.

MATURITY
Large number of models. Extensive. Margins drop. Shelf space Advertise. Promote heavily Prices fall (usually).

DECLINE
Eliminate unprofitable models Phase out unprofitable outlets Phase out promotion Prices stabilize at low level.

Product Strategy Distribution Strategy

Limited models Frequent changes Limited Wholesale/ retail distributors Awareness. Stimulate demand.Sampling High to recoup development costs

Promotion Strategy Pricing Strategy

Committees
Team of employees assembled to arrive at a joint solution to problem / situation at hand

Purpose and role

Examples include:
Creating new ideas, R&D, brainstorming Communication, disseminating information and obtaining feedback Problem solving, task force or working party Co-ordination of projects, departments, disciplines Representing interests of others, stakeholders, environment Overseeing procedures, roles, activities Making formal recommendations (to do something or not to do anything)

Typically consists of individuals from different divisions and departments

Attempt to resolve the problems through meetings and discussions

Types
Executive committees have the power to govern or administer. The board of directors of a limited company is itself a 'committee' appointed by the shareholders, to the extent that it governs or administers. Standing committees are formed for a particular purpose on a permanent basis. Their role is to deal with routine business delegated to them at weekly or monthly meetings.

Ad hoc committees are formed to complete a particular task (e.g. fact-finding and reporting on a particular problem before being wound up). Joint committees may be formed to coordinate the activities of two or more committees, for example, representatives from employers and employees may meet in a Joint Consultative Committee. This kind of committee can either be permanent or appointed for a special purpose.

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Sub-committees may be appointed by committees to relieve the parent committee of some of its routine work Management committees in many businesses contain executives at a number of levels not all the decisions in a firm need to be taken by the Board.

Advantages
Include:
More than one head to reach decision Spread of responsibility Multi-perspective, talent, judgment, abilities Larger work load Maximizing co-ordination Focal point for information and action Formalises processes, improves communications Delaying mechanism (when necessary)

Disadvantages
Include:
Can slow decision making Compromise Excessive procedures Waste time and resources Abdication of responsibility Dominating member(s) Groupthink Slow reaction to events Easy to delay and avoid decision making

Chair
Responsibilities (Higgs Report)
Leadership Ensuring effectiveness Setting the agenda Ensuring all receive accurate, timely, clear information Effective communication with primary external parties Managing time to allow appropriate discussion Encouraging active engagement and participation by all and equal opportunity for all

Chair
Skills (Higgs Report):
Understanding of formal/informal procedures Persuasion, firmness and tact Communications Impartial & objective Discrete and tactful Punctuality Considered to be the right person for the Chair

Committee Secretary
Primary responsibilities:
Schedule committee meetings (with the Chair); Prepare meeting agenda (with the Chair); Give notice of meetings Take meeting notes, decisions made, responsibilities Daft minutes for approval by the Chair Circulate approved minutes to all members Ensure members understand responsibilities for action Generally assist the Chair in running the meeting Provide the Chair with procedural support as necessary Provide general administration between meetings

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Committee Secretary
Skills:
Organisation Logical thinking Language and grammar Note taking Communication (writing VIP) Understanding of procedures

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