National Year 11 Business
Chapters: 2
1. 3.5 Marketing
3.5.1 Identifying and understanding customers · 3.5.2 Segmentation · 3.5.3 Market research · 3.5.4 Marketing mix: price · 3.5.4 Marketing mix: product · 3.5.4 Marketing mix: promotion and place
- Marketing Management – Marketing means finding out what buyers need and meeting that need in exchange for value, at a profit. It has many functions (research, planning, branding, labelling, packaging, pricing, promotion, distribution, service) and five philosophies (production, product, selling, marketing, societal). The marketing mix is the 4Ps: product (with branding, labelling, packaging), price (shaped by cost, demand, competition, government rules, objectives and marketing methods), place (channels and physical distribution) and promotion (advertising, personal selling, sales promotion, public relations).
- Market Segmentation: Dividing, Choosing and Positioning – Market segmentation means dividing a whole market into smaller groups (segments) of customers with similar needs and buying habits. The main bases are geographic (where they live), demographic (age, gender, income, family, occupation), psychographic (lifestyle, values, personality) and behavioural (usage rate, loyalty, benefit wanted, occasion). Segmentation helps a business understand customers, design the right product and price, spend promotion money wisely and find gaps. Then the business chooses its target market (targeting): undifferentiated (mass), differentiated (several segments) or concentrated (niche). Finally it positions the brand: decides the clear place it should hold in customers' minds versus rivals, often shown on a positioning (perceptual) map, and supports it with the marketing mix.
- Market Research: Finding Out What Customers Want – Market research means collecting and analysing information about customers, competitors and the market so a business can make better decisions and reduce risk. Primary (field) research collects new, first-hand data through surveys, interviews, observation, focus groups and test marketing. Secondary (desk) research uses data that already exists, like government statistics, reports and websites. Because you cannot ask everyone, you choose a sample: random, stratified, quota or convenience. Data can be quantitative (numbers) or qualitative (opinions and reasons). Results help with market segmentation, market mapping, finding gaps and building a value proposition. Research has costs and limits: bias, small samples and out-of-date data.
- Product Life Cycle: Stages, Extension Strategies and the Boston Matrix – The product life cycle shows how a product's sales change over time, through five stages: development, introduction, growth, maturity and decline. Cash flow is negative during development and introduction, turns positive in growth and is highest in maturity. Firms use extension strategies (new features, new markets, new packaging, lower price, more promotion) to delay decline. A business manages many products together as a portfolio; the Boston Matrix sorts them into stars, cash cows, question marks and dogs. Good product design balances function, look (aesthetics) and cost (the design mix), and keeps improving as technology and culture change.
2. 3.6 Finance
3.6.1 Sources of finance · 3.6.2 Cash flow · 3.6.3 Financial terms and calculations · 3.6.4 Analysing financial performance
- Sources of Business Finance – Every business needs money for long-term assets (fixed capital) and daily running (working capital). This money comes from two big pools: owners' funds (equity shares, preference shares, retained earnings) that need not be paid back, and borrowed funds (debentures, bonds, bank and institution loans, public deposits, trade credit, inter-corporate deposits) that must be repaid with interest.
- Cash Flow – Cash flow is the money moving into and out of a business. Net cash flow = cash inflows − cash outflows, and closing balance = opening balance + net cash flow. A cash flow forecast predicts this month by month so the firm can spot shortfalls early. A business can make a profit and still run out of cash, so managers improve cash flow with overdrafts, faster collection from customers, slower payment to suppliers, lower stock, factoring and sale and leaseback.
- Break-Even Analysis – A business breaks even when total revenue equals total cost, so profit is zero. Each unit sold brings a contribution = price − variable cost per unit, which first pays off the fixed costs. Break-even output = fixed costs ÷ contribution per unit. Sales above this make a profit; below it make a loss. Margin of safety = actual sales − break-even sales. To earn a target profit, sell (fixed costs + target profit) ÷ contribution per unit.
- Financial Statements of a Sole Proprietor – At the end of the year, the trial balance is turned into two statements. The trading and profit and loss account uses revenue items to find gross profit, operating profit and net profit. The balance sheet uses capital items to show assets, liabilities and capital on the last day, grouped and arranged in order. Its closing balances open next year's books through the opening entry.